We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
US Steel Imports Down on Tariffs, Market Share Falls in May
Read MoreHide Full Article
Much to the respite of American steel makers, U.S. steel imports have dropped roughly 12% year to date – according to the latest report from the American Iron and Steel Institute (“AISI”), an association of North American steel makers. The decline reflects the impact of the 25% tariff on steel imports which the Trump administration had levied last year.
Per the AISI, total and finished domestic steel imports are down 11.7% and 18.1% year over year, respectively, year to date (through the first five months of 2019) to roughly 13.58 million net tons and 9.95 million net tons, respectively.
In May, total and finished steel imports dropped 38.2% and 9.3% from April to around 2.06 million net tons and 1.85 million net tons, respectively. These figures are based on final U.S. Census Bureau data, the AISI noted.
Finished steel import market share was estimated at 19% in May. That is down from 21% clocked in April. Finished steel import market share was estimated at 21% for the first five months of 2019. That is considerably lower than the levels seen in the recent years. Finished steel import market share shot up to as high as 29% in April 2018. However, the punitive trade actions have led to a decline in market share since then.
For 2019, annualized total and finished steel imports are expected to decline 3.3% and 7% year over year respectively, per the AISI.
The biggest offshore suppliers for the first five months were South Korea with 1,287,000 net tons (down 16% year over year), Japan with 611,000 net tons (down 0.2%), Germany with 517,000 net tons (down 6%), Taiwan with 436,000 net tons (down 7%) and Vietnam with 368,000 net tons (down 5%).
Tariffs – A Breather for U.S. Steel Mills
The steep tariffs on steel imports, that were imposed under Section 232 of the Trade Expansion Act of 1962, have provided a much-needed reprieve to American steel makers and instilled optimism in the long-struggling U.S. steel industry.
The tariffs have boosted production capacity of U.S. steel producers amid lower imports. They have helped U.S. steel industry capacity break above the important 80% level – the minimum rate required for sustained profitability of the industry.
According to the AISI, U.S. steel mills operated at 80.5% of their capacity for the week ending June 22. Capability utilization rate for the week increased from 77.4% a year ago.
Improved capacity is also boosting U.S. steel production. Per the World Steel Association ("WSA"), crude steel production increased 6.2% year over year to 37.2 million tons in the United States for the first five months of 2019.
U.S. steel companies forged solid earnings last year, thanks largely to the Trump administration’s trade actions. The tariffs provided a boost to U.S. steel prices last year, driving profits and cash flows of American steel makers including United States Steel Corp. (X - Free Report) , Nucor Corp. (NUE - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and AK Steel Holding Corp. .
Nucor and AK Steel currently have a Zacks Rank #3 (Hold), while both Steel Dynamics and U.S. Steel carry a Zacks Rank #5 (Strong Sell).
Driven by the trade actions, a number of U.S. steel makers are investing heavily to ramp up production capabilities and upgrade facilities. However, higher production, partly driven by restarted mills, has contributed to the sharp decline in U.S. steel prices this year. The benchmark hot-rolled coil steel prices are now well below their peak level of roughly $920 per short ton (st) reached in July 2018.
Meanwhile, the United States, in May 2019, reached a deal to lift steel and aluminum tariffs from Canada and Mexico. These major trade partners have long been pushing the Trump administration to repeal the tariffs.
Following the imposition of tariffs in March 2018, President Trump softened his stance by excluding Canada and Mexico from the tariff orders, noting that they represent “a special case”. However, the United States moved ahead with tariffs on steel and aluminium imports from Canada and Mexico after the expiration of temporary exemptions on these countries on Jun 1, 2018.
The deal removed a major hurdle to the ratification the new United States-Mexico-Canada Agreement (“USMCA”) to replace the North American Free Trade Agreement (“NAFTA”). Mexico, last week, became the first country to approve the USMCA as its senate ratified the deal by a significant majority. The United States and Canada are yet to pass the trade deal.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
US Steel Imports Down on Tariffs, Market Share Falls in May
Much to the respite of American steel makers, U.S. steel imports have dropped roughly 12% year to date – according to the latest report from the American Iron and Steel Institute (“AISI”), an association of North American steel makers. The decline reflects the impact of the 25% tariff on steel imports which the Trump administration had levied last year.
Per the AISI, total and finished domestic steel imports are down 11.7% and 18.1% year over year, respectively, year to date (through the first five months of 2019) to roughly 13.58 million net tons and 9.95 million net tons, respectively.
In May, total and finished steel imports dropped 38.2% and 9.3% from April to around 2.06 million net tons and 1.85 million net tons, respectively. These figures are based on final U.S. Census Bureau data, the AISI noted.
Finished steel import market share was estimated at 19% in May. That is down from 21% clocked in April. Finished steel import market share was estimated at 21% for the first five months of 2019. That is considerably lower than the levels seen in the recent years. Finished steel import market share shot up to as high as 29% in April 2018. However, the punitive trade actions have led to a decline in market share since then.
For 2019, annualized total and finished steel imports are expected to decline 3.3% and 7% year over year respectively, per the AISI.
The biggest offshore suppliers for the first five months were South Korea with 1,287,000 net tons (down 16% year over year), Japan with 611,000 net tons (down 0.2%), Germany with 517,000 net tons (down 6%), Taiwan with 436,000 net tons (down 7%) and Vietnam with 368,000 net tons (down 5%).
Tariffs – A Breather for U.S. Steel Mills
The steep tariffs on steel imports, that were imposed under Section 232 of the Trade Expansion Act of 1962, have provided a much-needed reprieve to American steel makers and instilled optimism in the long-struggling U.S. steel industry.
The tariffs have boosted production capacity of U.S. steel producers amid lower imports. They have helped U.S. steel industry capacity break above the important 80% level – the minimum rate required for sustained profitability of the industry.
According to the AISI, U.S. steel mills operated at 80.5% of their capacity for the week ending June 22. Capability utilization rate for the week increased from 77.4% a year ago.
Improved capacity is also boosting U.S. steel production. Per the World Steel Association ("WSA"), crude steel production increased 6.2% year over year to 37.2 million tons in the United States for the first five months of 2019.
U.S. steel companies forged solid earnings last year, thanks largely to the Trump administration’s trade actions. The tariffs provided a boost to U.S. steel prices last year, driving profits and cash flows of American steel makers including United States Steel Corp. (X - Free Report) , Nucor Corp. (NUE - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and AK Steel Holding Corp. .
Nucor and AK Steel currently have a Zacks Rank #3 (Hold), while both Steel Dynamics and U.S. Steel carry a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Driven by the trade actions, a number of U.S. steel makers are investing heavily to ramp up production capabilities and upgrade facilities. However, higher production, partly driven by restarted mills, has contributed to the sharp decline in U.S. steel prices this year. The benchmark hot-rolled coil steel prices are now well below their peak level of roughly $920 per short ton (st) reached in July 2018.
Meanwhile, the United States, in May 2019, reached a deal to lift steel and aluminum tariffs from Canada and Mexico. These major trade partners have long been pushing the Trump administration to repeal the tariffs.
Following the imposition of tariffs in March 2018, President Trump softened his stance by excluding Canada and Mexico from the tariff orders, noting that they represent “a special case”. However, the United States moved ahead with tariffs on steel and aluminium imports from Canada and Mexico after the expiration of temporary exemptions on these countries on Jun 1, 2018.
The deal removed a major hurdle to the ratification the new United States-Mexico-Canada Agreement (“USMCA”) to replace the North American Free Trade Agreement (“NAFTA”). Mexico, last week, became the first country to approve the USMCA as its senate ratified the deal by a significant majority. The United States and Canada are yet to pass the trade deal.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>