U.S. Steel: More Tariffs But Stock Clobbered Anyway -- Barron's Blog
10:52 am ET September 13, 2016 (Dow Jones)
By Ben Levisohn
U.S. Steel ( X) got what it wanted when the U.S. International Trade Commission ruled that seven countries could be hit with tariffs for dumping their steel. Citigroup's Alexander Hacking has the details:
Hot Rolled Coil Steel - The ITC has confirmed final duties on HRC imports from seven countries: Australia, Brazil, Japan, Korea, the Netherlands, the UK and Turkey (dumping only). Note: China has already been ruled against. Import duties are now fixed for five years. The only blip is that the ITC made a negative ruling on Turkish government subsidies (so the duty now applies to anti-dumping only at 4-7%, removing the additional 6% subsidy rate). Platts reports that one Turkish mill has been offering sales with the duty paid.
Stainless - The DoC yesterday made a preliminary determination that imports of stainless steel from China are being sold at dumping prices in the US. Preliminary duties have been established at 64% to 77%. The ITC will now investigate damages to domestic producers before determining final duties.
These two rulings were widely expected but continue t he positive momentum of US steel producers in widening trade protection. We expect domestic U.S. steel prices to hold the $550-600/t range in 2H16, partly supported by lower imports and also by low inventory and mill idlings. Prices are expected to fall to $500-550/t in mid-2017 as traders find new sources of imports.
Unfortunately, the rulings have done nothing for U.S. Steel's stock--or the stocks of competitors like AK Steel ( AKS), Nucor ( NUE) and Steel Dynamics ( STLD)--today.
Shares of U.S. Steel have dropped 5.2% to $16.53 at 10:49 a.m. today, while AK Steel has tumbled 5.6% to $4.02, Nucor has fallen 2.6% to $46.46, and Steel Dynamics is off 2.6% to $23.50.
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