U.S. Steel Prices Dropped Down Pre-Tariff Levels
S&P Global Platts reported that the prices of steel in the United States fell below levels before U.S. President Donald Trump announced imposing 25 percent tariff on imported steel last March 2018. The prices were affected by the growing concerns about the slowdown in demand in China.
The data of S&P showed that the benchmark price for hot-rolled steel coil fell to about $725 a short ton at the end of last week from $920 a short ton last July. The drop in benchmark price is around 21 percent.
The decrease is the lowest level recorded since the Trump administration imposed a global tariff of about 24 percent on every steel import. The tariffs were recommended by the U.S. commerce secretary Wilbur Ross and it was implemented under Section 232 of the 1962 Trade Expansion Act.
The Trump administration claims that the tariffs will help the U.S. steelmakers. The decline in price, however, presents a different result which adds pressure to the current administration.
On Monday, the largest U.S. steel producer, Nucor, publicized their plan to invest on a new $1.35 billion plate mill in the U.S. Midwest which will operate in 2022 and is expected to provide 400 permanent jobs. The company's chief executive, John Ferriola, told analyst through a phone call that the decision was not based on the tariffs but it is their response to deregulation, corporate tax cuts, and imposed measures to control dumping and subsidies by other countries.
The American Iron and Steel Institute said that Nucor's announcement reflected the trend that is accumulating in the industry. He said that it is now the right time to be making steel in America noting the things to be done to reach output levels.
Despite the growing hope in the steel industry, Nucor's shares show a slow increase of only about 4 percent since President Trump started his administration in November 2016. The increase shows underperformance compared to the 19 percent increase in the S&P 500 index. The same trend was seen with other steel companies. Steel Dynamic's shares slightly increased by 12 percent since the president's election win. U.S. steels shares dropped by 2 percent along with the decrease in the share of AK Steel by 58 percent. The shares of the companies show the slowing growth in the steel industry. The fall in steel prices is a global phenomenon proven by its current situation in China and Europe last summer.