US steel imports drop in August as prices continue their upward trajectory
Steel imports to the United States fell in August on a monthly comparison basis, but are up year-over-year for the first eight months of the year, according to the latest American report. Iron and Steel Institute (“AISI”).
Total steel imports drop 10% in August
The North American Steelworkers Association noted that total domestic steel imports fell 10.1% from the previous month in August to about 2.77 million net tonnes. Imports of finished steel increased 1% to about 2.1 million net tonnes for the reported month.
The largest volumes of finished steel imports from overseas in August were South Korea with 163,000 net tonnes (down 45% from July), Taiwan with 105,000 net tonnes (up by 36%), Germany with 80,000 net tonnes (up 16%), Japan with 77,000 net tonnes (up 16%) and Vietnam with 73,000 net tonnes (down 28%) , by AISI.
Meanwhile, domestic total and finished steel imports increased 25.5% and 26.9% year-on-year, respectively, since the start of the year in the first eight months of 2021. AISI noted that these figures are based on preliminary Census Bureau data.
According to AISI, the market share of finished steel imports was estimated at 21% in August, stable sequentially. For the first eight months of 2021, the market share of finished steel imports has been estimated at 20%.
For 2021, total annualized and finished steel imports are expected to be 30.8 million net tonnes (up 40.1% year-on-year) and 21.3 million net tonnes, respectively ( up 32.1%), noted AISI.
Record prices put U.S. steel industry in driver’s seat
The US steel industry is reaping the rewards of historically high steel prices, thanks to increased demand in key end-use markets and tight supply conditions in part due to production disruptions in the markets. domestic steel mills and high Section 232 tariffs on steel imports.
The coronavirus pandemic caused a sharp drop in demand for steel in major markets such as construction and automobiles during the first half of last year. A drop in crude oil prices also hurt demand for steel in the energy sector. The demand shocks induced by the pandemic have also forced US steel mills to cut production, with capacity utilization falling to its lowest level in several years. However, demand for steel has picked up as major steel-consuming sectors regained a foothold following the easing of restrictions imposed by the virus.
Improving demand in the end market also helped the US steel industry‘s capacity utilization rate to surpass the significant level of 80% after plunging to 51.1% in May 2020 – the highest level. low for many years. According to AISI, the capacity utilization rate reached 85.2% for the week ending September 25.
Strong demand and persistent supply shortages continue to push up US steel prices this year, allowing US steel companies to post record profits. Benchmark hot-rolled coil (“HRC”) prices fell to a multi-year low of around $ 440 per short ton in August 2020 as the coronavirus shattered demand in major markets. However, HRC prices started to recover in September 2020 and have been on the rise since then. Prices remain above the $ 1,900 per short ton level this month. According to Fastmarkets MB, the US HRC index was $ 1,960 per short ton on September 29.
Despite a slowdown in steel consumption in the automotive market amid the current semiconductor crisis, supply constraints due to production interruptions and a series of plant shutdowns and maintenance Scheduled are expected to support HRC prices through the end of 2021, leading to profit margins in the domestic market. steel companies.
Steel stocks are worth a look
Some actions currently to be considered in the steel industry are, Nucor Company NAKED, United States Steel Company X, Steel Dynamics, Inc. STLD and Trading metals company CMC, each sporting a Rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
Nucor has forecast a profit growth rate of 534.4% for the current year. Zacks’ consensus estimate for current year earnings has been revised up 21.5% in the past 60 days.
US Steel has forecast a profit growth rate of 390.6% for the current year. The consensus estimate for the current year has been revised upwards by 22.9% in the last 60 days.
Steel Dynamics has forecast a profit growth rate of 431% for the current year. Zacks’ consensus estimate for the current year has been revised 16.6% upward in the past 60 days.
Commercial Metals forecasts a profit growth rate of 37.1% for the current fiscal year. The consensus estimate for the current fiscal year has been revised upward by 3.1% over the past 60 days.
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