The share prices of some of the major companies in the U.S. steel industry closed on a lower note on Tuesday despite a decision on imported steel products announced by the U.S. Department of Commerce. The agency on Tuesday disclosed final anti-dumping (AD) and countervailing duty (CVD) rates that could be imposed on foreign companies from 10 countries for their corrosion-resistant steel (CORE) imports into the U.S.
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AD is a tariff on imports sold below the fair market value, while CVD targets those offset by subsidies provided by foreign governments to exporters. The decision, which covers about $2.9 billion in imports from foreign companies based in Australia, Brazil, Canada and Mexico, among others, recommends AD/CVD duty rates ranging between about 17 and 110%.
Speaking on the decision, William Kimmitt, Under Secretary of Commerce for International Trade, reiterated that the Trump administration will “vigorously” enforce American trade laws and not accommodate unfairly traded products in the country’s steel industry. “American steel companies and workers deserve to compete on a level playing field,” Kimmit said in a statement.
Steel Shares Shrug off Latest Update
However, the protectionist measure appears to have had no major impact on the steel stocks traded on U.S. exchanges. At the close of trading on Tuesday, major firms in the industry, including Nucor (NUE), ArcelorMittal (MT), Steel Dynamics (STLD) and POSCO (PKX) saw their share prices ending about 1% lower. However, the shares of Reliance Steel (RS) and Cleveland-Cliffs (CLF) managed to clinch marginal increases at the closing bell.
The Commerce Department’s decision comes amidst the continued implementation of tariff-based protectionist policies by the Trump administration to support the country’s steel industry. CORE is a type of steel that protects against rust and corrosion due to a protective layer of chemical elements such as chromium. The material is used across key industries, including in the construction of bridges and buildings, the protection of oil and gas pipelines, and the safeguarding of automotive and aerospace products against harsh conditions, among other uses.
ITC to Weigh in
With the market’s reaction to the update, it appears the development had already been priced in ahead of the statement. However, the reaction could also be because actual relief concerning Commerce’s decision is still subject to a final assessment by the International Trade Commission (ITC). The ITC will assess the level of harm to the local domestic steel industry due to foreign companies’ “dumping” of CORE products into the US or access to subsidies by foreign governments.
To understand the performance of stocks in the steel industry, TipRanks’ Comparison Tool provides key metrics that can help investors assess their health. The graph below shows the performance of some of the key stocks such as NUE, MT, STLD, and PKX.
