American steelmakers view overcapacity in Chinese steel and the resulting export as a big problem. Their colleagues around the world also consider subsidized steel exports from China as a problem. Several countries, including the United States, have high tariffs to prevent Chinese metal products from flooding their markets. President Trump went even further and last year introduced a general 25 percent tariff on steel imports in the United States. U.S. steel inventories such as US Steel (X), AK Steel (AKS), and Nucor (NUE) closed with losses last year, despite tariffs.
It is noteworthy that China has taken some measures to reduce excess capacity. Steel exports in the country fell sharply from the maximum of 2015. Steel imports in the US also declined after the introduction of tariffs under section 232. So far, developments have been encouraging. However, stock prices of US steel companies were reduced.
What harms stock prices of American metallurgical companies
China's slowdown and trade tensions have negatively impacted global steel prices. Steel prices in the USA cannot but coincide with global trends. U.S. steel prices fell in 2015 due to fears of a slowdown in China. However, US steel prices recovered after fears of China's slowdown in 2016 eased. Weak steel prices in China and uncertainty during the trade war are lowering price activity for companies. U.S. steel companies have announced three rounds of price increases after US steel prices fell to apartment lows in May.
Steel prices in the United States rose from June to July. Pricing in August stalled amid a worsening US-China trade war. Market sentiment became negative after the aggravation of the trade war. The American steel industry has welcomed China’s appointment as a "currency manipulator." However, rising trade tensions do not help US stock prices.
