A Deeper Dive into March US Steel Imports Data
How Do Steel Industry Indicators Look amid 1Q16 Earnings?
March US steel imports data
As noted in the previous part of this series, US steel imports rose on a month-over-month basis in March. However, along with the consolidated steel imports data, you should also keep an eye on the imports breakdown.
In this part of the series, we’ll explore which product categories saw more imports in March and where we saw a decline in imports.
Flat-rolled steel products
Flat-rolled steel products, which consist of hot rolled coil (or HRC), cold rolled coil (or CRC), and hot-dip galvanized (or HDG) steel products, have seen some real action in 1Q16. Preliminary duties have been imposed on all these product categories.
This has helped US steelmakers including U.S. Steel Corporation (X), AK Steel (AKS), and Commercial Metals Company (CMC) to raise their base selling prices.
HRC imports fall
The impact of duties is visible in March’s steel imports. HRC imports fell by 20% month-over-month in March and reached a multiyear low. Notably, along with the anti-dumping duties, HRC imports have come down due to the narrowing gap between the US and global HRC prices.
While US HRC prices have increased in the ballpark of 30% so far in 2016, Chinese HRC prices have spiked by almost 60%. So despite lower-than-expected anti-dumping duties, we have seen HRC imports fall steeply, as shown in the graph above.
The steep decline in HRC imports would give some headroom to US (PWB) steel companies in further raising their spot HRC offers. Furthermore, the CRC-HRC spread is still near record highs. We could see a further increase in HRC prices this year based on the above argument. Nucor (NUE), which has a high share of HRC in its product portfolio, would stand to gain if HRC prices rise further.
Although HRC imports dipped steeply in March, HDG imports were almost flat as compared to the corresponding month last year. CRC imports fell by ~10% year-over-year in March.
In the next part of this series, we’ll see how imports played across some of the other product categories.
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