The U.S. International Trade Commission (USITC), yesterday, made its final determinations on anti-dumping duty investigations on imports of steel concrete reinforcing bar (rebar) from Taiwan and found that imports of these products have caused material injury to the American steel industry. The regulator also approved the anti-dumping duties on imports of these products.
The anti-dumping case was filed by the Rebar Trade Action Coalition on behalf of its individual members that include Nucor Corporation (NUE - Free Report) , Commercial Metals Company (CMC - Free Report) and Steel Dynamics, Inc. (STLD - Free Report) . Imports of steel concrete rebar from Taiwan were valued at an estimated $53 million last year.
The U.S. Department of Commerce (DOC), in July 2017, determined that these products are being sold in the American market below their fair values. The DOC slapped a final anti-dumping duty rate of up to 32% on these imports. As a result of the USITC’s affirmative findings, the DOC will now issue an anti-dumping duty order on the Taiwanese imports.
The ruling marks yet another victory for crisis-hit U.S. steel companies in their ongoing battle against unfairly-traded, cheap imports.
American steel makers continue to reel under the effects of a tide of cheap imports, notwithstanding a series of punitive trade actions in the recent past. Domestic steel producers, during their second-quarter earnings call, raised concerns about a renewed flood of subsidized imports this year.
While positive rulings in trade cases (resulting in levy of heavy tariffs) against China last year led to a decline in Chinese steel exports to the United States, imports from other countries remain at above historical levels.
Steel stocks got a big thrust in April 2017 after the Trump administration ordered an investigation under Section 232 of the Trade Expansion Act of 1962. The Section 232 probe is aimed at determining whether the imports pose a threat to national security and also gives the President the power to impose broad tariffs or quotas on imported steel. However, steel imports have surged since the launch of the investigation with import market share reaching as high as 30% in June 2017.
According to the American Iron and Steel Institute (AISI), an association of North American steel makers, total steel imports shot up roughly 22% year over year through the first seven months of 2017. Year to date, finished steel import market share is estimated at 28%, which is higher than 26% clocked in full-year 2016.
Executives of U.S. steel and steel-related firms, in a letter, recently urged President Trump to impose immediate restrictions on imports. The appeal came after a delay in the release of the report on the Section 232 probe by the DOC.
Nevertheless, steel prices have rebounded this year on the back of trade actions, reflected by an increase in hot-rolled and cold-rolled steel prices. China’s actions to reduce its excess steel supply are also expected to lend support to steel prices in 2017. The world’s largest steel producer has pledged to cut its steel production capacity by around 50 million metric tons in 2017.
The Zacks Steel Producers industry has outperformed the broader market in a year’s time. The industry has gained around 33.5% in this period, higher than the S&P 500’s corresponding return of around 12.9%.
A couple of stocks worth considering in the steel space are POSCO and Schnitzer Steel Industries, Inc. (SCHN - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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