Why We’re Revising Our Price Estimate For U.S. Steel To $25

August 8th, 2016 by Trefis Team
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United States Steel

The U.S. Department Of Commerce (DOC) issued final determinations of antidumping duties on steel imports from seven countries last week, a development that is a major boost for the domestic steel industry. [1] The DOC ruling is a confirmation of its preliminary ruling in response to a petition from domestic steelmakers, levying punitive duties on imported steels from the same countries. [2] Competition from cheap steel imports to the U.S., the share of which rose from 23.2% of the U.S. domestic steel market in 2013 to 29.3% in 2015, adversely impacted pricing, shipments and margins for domestic steelmakers. [3] A similar story was also playing out in Europe, with competition from imported steels negatively impacting the prospects of steelmakers in Europe, including U.S. Steel’s European operations. European regulatory agencies have taken a stand similar to their U.S. counterparts, with the imposition of antidumping duties on steel imports from Russia and China. [4]

The impact of the aforementioned regulatory interventions was reflected in the sequential increase in U.S. Steel’s realized steel prices in Q2. With competition from imported steels dissipating as a result of regulatory intervention, we have revised our pricing and margin estimates for the company’s U.S. Flat-rolled and European operations. Check out our revised forecasts for these divisions:

These changes to our estimates for the company’s business drivers have translated into a revised price estimate for U.S. Steel, reflecting the more favorable business environment.

Have more questions about U.S. Steel? See the links below.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for U.S. Steel

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Notes:

  1. US issues final antidumping duties for hot-rolled coil steel from seven nations, Platts [↩]
  2. U.S. plans to slap anti-dumping duties on some hot-rolled steel imports, Reuters [↩]
  3. ArcelorMittal’s 2015 20-F, SEC [↩]
  4. EU announces fresh anti-dumping duties on Russian and Chinese steel imports, Financial Times [↩]