NEGOTIATOR’S TAKE: More signs U.S. steel prices may have bottomed – good time to consider locking in supply.
Steel prices have been under considerable pressure from imports
Like all U.S. steelmakers, Nucor (NYSE:NUE) has been under pressure from imports, and has been vocal about dumping. China produced 50% of world steel output in 2015, and declining domestic Chinese demand over the last few years, particularly declines in construction activity, has released this supply onto world markets. The U.S. industry’s complaints have been heard: in November the Commerce Department imposed countervailing duties of 236% on Chinese corrosion-resistant coil, and subsequently it imposed an additional 256% tariff on Chinese imports as well as lower ones on South Korean, Italian and Indian steel.
Help from tariffs have come too late
These measures may be too late to be of more than symbolic value. Total imports of finished steel declined 6.9% in 2015 and import market share fell eight percentage points to 26% over the course of the year, although the average of 29% was a record. Chinese imports fell 25.5%. But the damage has been done: prices are weak, as is capacity utilization.
Graph Source: steelbenchmarker.com
Automobile sales and commercial construction
U. S. prices are their weakest in twelve years. Thanks to automobile sales and commercial construction, the U.S. was one of very few countries with healthy steel demand in late 2013. U.S. prices rose in the face of declines everywhere else, so the U.S. became a magnet for foreign steel until prices collapsed.
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SOURCE: Seeking Alpha
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