Are Steel Industry Indicators Showing Strength in 2016?
Are Steel Industry Indicators Showing Strength in 2016?
Steel industry indicators
The steel industry has seen a change of fortune during the last couple of months. The year started on a weak note as most steel stocks fell to multiyear lows in the first trading week of the year. This decline also tracked the weakness in the commodity sector (GCC). However, prices recovered thereafter.
The above graph shows the 2016 price movements of different steel companies. With the recent upward price action, most steel stocks have recovered their 2016 losses and are trading with decent year-to-date (or YTD) gains.
U.S. Steel Corporation (X) and AK Steel (AKS) have been among the better-performing steel companies this year. ArcelorMittal (MT), which had fallen steeply after its 4Q15 earnings, is also trading with YTD gains of 41%. Nucor (NUE) and Steel Dynamics (STLD) are also trading with YTD gains of 15% and 22%, respectively.
Series overview
So, how real is this upward momentum in steel stocks? Is it backed by fundamentals or are steel stocks only tracking the recent uptrend in the metals and mining sector? In this series, we’ll look at the recent steel industry indicators. We’ll explore whether there really are some green shoots emerging for the US steel industry or whether they are just false turnaround hopes.
One of the factors subduing the US steel industry has been steel imports. However, steel imports have started to taper down in the last few months. The aggressive stance taken by the US steel industry in filing trade cases has started to show fruit. After cold-rolled steel products, preliminary anti-dumping duties have been imposed on hot-rolled steel products.
In the next part, we’ll explore the implications of these anti-dumping duties on the US steel industry.
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