Steel Stocks Pop As U.S. Slaps Huge Duties On Vietnam Imports
Zacks Investment Research | Dec 06, 2017 09:18PM ET
Shares of major American steel makers got a lift yesterday after the U.S. Department of Commerce (DOC) issued positive preliminary rulings on imports of corrosion-resistant steel (CORE) and certain cold-rolled steel flat products into the United States from Vietnam that are made from materials originating in China. The DOC has imposed heavy tariffs on these imports after finding that they have been skirting U.S. anti-dumping and countervailing duty orders.
Shipments of CORE to the United States from Vietnam have surged to $80 million from $2 million after preliminary duties were levied on Chinese products in 2015. Moreover, cold-rolled steel shipments from Vietnam to the United States have shot up to $215 million from $9 million after preliminary duties were imposed on Chinese products two years ago.
Domestic producers of CORE and cold-rolled steel including United States Steel Corporation (NYSE:X) , AK Steel Corporation (NYSE:AKS) , Nucor Corporation (NYSE:NUE) , Steel Dynamics, Inc. (NASDAQ:STLD) and ArcelorMittal USA LLC, part of ArcelorMittal (NYSE:MT) , had filed the complaint in September 2016.
The DOC will now instruct U.S. Customs and Border Protection (CBP) to start requiring cash deposits on imports of CORE and cold-rolled steel made in Vietnam using substrate originating in China.
The CBP will collect anti-dumping and countervailing cash deposits on imports of CORE made in Vietnam using Chinese-origin substrate at rates of 199.43% and 39.05%, respectively. Moreover, the CBP will collect anti-dumping and countervailing cash deposits at rates of 265.79% and 256.44%, respectively, on cold-rolled steel imported from Vietnam that are produced from substrate originating from China.
The DOC is expected to issue its final rulings on these investigations on Feb 16, 2018.
Steel Stocks Take Flight
The ruling marks yet another victory for crisis-hit U.S. steel companies in their ongoing battle against unfairly-traded, subsidized imports that continue to flood the American market.
The DOC’s ruling provided a boost to the stocks of leading domestic steel companies that are struggling to cope with a renewed tide of cheap steel imports this year. U.S. Steel racked up the biggest gain with its shares rising as much 7.8% yesterday. AK Steel’s shares popped 6.6% while Steel Dynamics and Nucor notched up 3.7% and 2.5% gains, respectively.
U.S. Steel lauded the DOC’s move and said, in a statement, yesterday that “The Commerce Department’s finding of circumvention represents a critical step to shutting down one of the many paths used to flood the U.S. with dumped and subsidized steel." The steel giant also urged President Trump and U.S. Commerce Secretary Wilbur Ross to take immediate and broad action in the Section 232 investigation on steel imports and national security.
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AK Steel also hailed the ruling and stated that "We are pleased with this decisive action by the Commerce Department against foreign producers and importers who have been and continue to attempt to circumvent our trade laws."
U.S. Steel, Nucor, AK Steel and Steel Dynamics each carry a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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