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What's the outlook for North American steel following 232?

Metal Bulletin Research examines the impact of Section 232 tariffs and how they will affect steel markets and prices in the region.

In March 2018, President Donald Trump announced tariffs of 25% on steel imports into the United States. In anticipation, US flat steel prices increased in February and early March, and by March 8 hot-rolled coil (HRC) reached its highest level since May 2011. But will this rally last? In this report, Metal Bulletin Research provides an outlook and market analysis on the North American steel market by product following the Section 232 announcement.

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Key Highlights

 - There are no expectations for domestic prices to rise as much as 25%, to match the tariffs, or for the price rally to last.

 - US forecasts for flat and long products were raised to reflect permanently higher import offers, but if international prices weaken in the second quarter, sourcing from foreign mills will be more profitable, while countries exempt from tariffs will try to increase sales, adding to downside risks.

 - Recommendations from the US Department of Commerce (DoC) aim to increase the US crude steel capacity utilization rate to 80%. This means US mills need to produce over 88 million metric tonnes of crude steel, an 8% or 6.3 million tonne increase.

 - Anticipating a stronger market in 2018, US Steel and Republic Steel will restart idled facilities. Integrated producers’ utilization rate was 67% in 2017, so they could raise output, though this will take time. Electric arc furnaces’ (EAF) utilization rate was 78% in 2017, with some mini-mills running close to 90%.

 - The DoC maintains that tariffs will have minimal impact on the final cost of steel-containing goods in the US, but a sharp rise in steel prices risks impacting end-user demand and could lead to slower growth in manufacturing activity.

Download the full report below:

This content is provided by AMM Events for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.