US steel exports have plunged since the Section 232 tariffs were implemented against imports from Canada, Mexico and the European Union, according to a review of Commerce Department figures by Fastmarkets AMM.
The US exported 558,661 tonnes of steel in November 2018, the last full month for which figures are available – off 2.4% from 572,513 tonnes in October 2018 and down 30.2% from 800,740 tonnes in November 2017, according to data from the US Department of Commerce’s Enforcement and Compliance division.
On a percentage basis, some of the products that posted the greatest year-on-year declines were line pipe (down 85.7%), rebar (down 73.9%), hot-rolled coil (down 41.9%) and cut-to-length plate (down 23.8%).
Among typical US export destinations, shipments to Canada experienced the steepest drop. The US exported 240,342 tonnes to Canada in November, down nearly 4% from 250,238 tonnes in October 2018 and falling by 38.7% from 391,886 tonnes in November 2017, Commerce data showed.
Canada strikes back
The US hit Canada, Mexico and the EU with Section 232 tariffs - 25% in the case of steel - on June 1. Mexico retaliated on June 5 and Canada on July 1.
Before the 232 and retaliatory tariffs were imposed, Canada had historically been the United States’ largest trading partner in steel products.
In the five months before Canada set its countermeasures, US exports to its northern neighbor averaged 406,427 tonnes per month. Shipment volumes then plunged by 38.5% to an average 249,949 tonnes in the following five months, according to Fastmarkets AMM's calculations.
Globally, US exports averaged 781,375 tonnes per month over February-June 2018, before falling to an average 568,695 tonnes for July-November 2018. If that downtrend were to extend over 12 months, the volume difference would amount to 2,532,034 tonnes - or 2,791,061 short tons - of lost demand year on year.
For comparison, Steel Dynamics Inc’s planned flat-rolled mill in the US Southwest is expected to have annual capacity of 3 million short tons.
The missing piece?
Market participants typically track import data closely, to look for developments that may affect pricing. But they might want to keep tabs on exports, too, analyst Gordon Johnson, managing director of Vertical Group, told Fastmarkets AMM.
The market has struggled to explain why hot-rolled coil lead times, for example, have remained short in February - a month when lead times typically stretch out.
“People are out there saying [prices] are rebounding. I don’t think that’s the case based on these lead times… What people may be missing is the demand from exports,” Johnson said.
Fastmarkets AMM's daily US Midwest hot-rolled coil index stood at $34.22 per hundredweight ($684.40 per ton) on Tuesday February 12, down 0.4% from $34.35 per cwt on February 11 but up 3.3% from $33.13 per cwt on January 31.
Despite prices gaining ground in the wake of mill price hikes in late January, hot band lead times remain as short as two to four weeks, market participants have said.