Why Steel Stocks Have Risen This Week
Stocks of steel companies operating in the U.S. have risen sharply over the past few days amid strengthening expectations of the White House instituting more measures to tackle the issue of unfairly traded steel imports.
ArcelorMittal Stock Price, Source: Google Finance
U.S. Steel Stock Price, Source: Google Finance
The Department of Commerce is expected to announce the results of its Section 232 investigation this week into whether foreign steel imports threaten U.S. national security. [1] The findings of the report can become the basis for taking greater action to restrict imports of the offending commodity.
In determining whether a commodity is critical to national security, the administration is expected to study the extent of its usage in industries such as defense, energy, and telecommunications. The previous Section 232 investigation covering iron ore and semi-finished steel products, undertaken under the Bush administration in 2001, determined that steel was not critical to national security partly because the defense sector accounted for only around 3% of domestic steel usage. [2] While the share of usage of steel in defense has not altered drastically, it remains to be seen whether the outcome is different this time around. Though the market is anticipating an outcome that is favorable to the steel industry, it is not a foregone conclusion as the White House will have to consider potential retaliatory trade-related action taken by foreign countries against American exports. However, given President Trump’s tough stance against unfairly traded steels, the week could end on a good note for the steel industry.
Have more questions about ArcelorMittal? See the links below.
- Why We’ve Raised Our Price Estimate For ArcelorMittal To $23
- ArcelorMittal’s Q1 2017 Earnings Review: Improved Business Conditions Drive Earnings Improvement
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