Higher imports likely to put pressure on pricing
Imports not expected to rise, but climb above 2019-2020 lows
Record US steel prices in 2021, doors open for imports
According to industry analysts, US steel imports are expected to rise enough in 2022 to keep pressure on domestic prices, which hit a record low in 2021, but these shipments will not necessarily represent an increase in imports.
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John Anton, director of pricing and procurement at IHS Markit, said next year’s steel import numbers could appear to spike, but that’s mainly because import tariffs have been unusual since 2018 due to the coronavirus pandemic and logistics issues. has been substantially less.
“I can see that imports may return to 2015-2017 levels, but they don’t seem to be rising,” Anton said in a recent interview with S&P Global Platts.
Anton said imports of some steel products such as hot-rolled coils have already increased in the months after 2021 as higher US prices have made lower-priced imports more attractive despite tariffs.
According to data from the US Census Bureau, US HRC imports reached 458,994 million tonnes in October, the only month in 2021 where shipments of the product exceeded 400,000 million tonnes.
UBS analyst Andreas Bokenheuser said the availability of imports in 2022, with new North American steel capacity coming on line, will ease supply tightness and could weigh on higher domestic prices, a trend that began in late 2021. Was.
“Many buyers are opting for imports,” he told Platts. “This, in combination with higher inventory and falling lead times, is probably going to push home prices down even further.”
The Platts TSI US Hot-Rolled Coil Index was valued at $1,500/st EXW Indiana at the end of 2021, up from $1,009/st at the start of the year, but down from a record $1,960.25/st in September.
According to Phil Gibbs, an equity research analyst at KeyBanc Capital Markets, a more vulnerable price trend will increase in 2022 as US producers respond to higher imports.
“For domestic mills to get their order books back, they have to encourage buyers to stop coming to them and placing them on modest import orders,” Gibbs said in a recent interview with Platts. “It’s going to put pressure on pricing.”
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Amid the recent spurt in imports, US steel industry groups said proper application of the trade mechanism in 2022 will be critical to protecting domestic producers.
“We’re seeing a lot of steel coming in, and part of that is because we have a strong economy and strong demand,” Kevin Dempsey, CEO of the American Iron and Steel Institute, told Platts.
“But we want to ensure that our trade laws, both 232 (tariff) and antidumping and countervailing duty laws, are fully and effectively implemented as a new boom in imports, dumps and subsidized imports really hits the industry. can stop progress.
Philip Bell, president of the Steel Manufacturers Association, said finished steel imports market share in the US reached 25% by the end of October, a figure that “we should be concerned about.”
“What we have seen is a steady increase in imports from the beginning ”We know we’ll need fair and legally traded imports to meet certain demands in our country, but 25% is starting to hit historic highs,” Bell told Platts.
As per the latest AISI analysis, the finished steel import market share was estimated at 27% in November and is estimated to be 22% in the first eleven months of 2021.
Anton said that as long as domestic prices remain above global prices, imports will continue to play an important role in the US market. However, the price difference between US-made steel and foreign steel represents a kind of “paradox”.
“The US costs less per ton than Europe where they have older mills and even stricter labor laws, perhaps an imminent carbon limit tax and more natural resources.” [in the US],” he said. “There is no reason why steel should be more expensive in the US than in Europe.”
Quotas can help avoid bounce
The Biden administration began revising US Section 232 metals tariffs in October on a deal with the European Union that would allow a certain quantity of shipments to enter the US duty-free under a quota, and with other foreign governments. With this, a similar arrangement can be done in 2022. ,
,[The tariff-rate quota with the EU] That gives us some protection against a new surge in imports and ensuring its full and effective enforcement is going to be really important,” Dempsey said.
Section 232 tariffs were imposed on most countries in 2018 under former President Donald Trump.
Bockenheuser said US industry is now in a “slightly holding pattern” as other countries lobby the US to revise steel tariffs on their own exporters, but the change in duties will ultimately help US downstream manufacturers.
“Bringing cheaper steel into the country should help in giving relief to the manufacturers,” he said. “Manufacturers will be able to buy price-competitive steel in the US, whether from domestic supplies or imports.”