Steel investors still await payoff
U.S. producers’ shares have struggled amid concerns over demand.
A lot of investors seem to have lost the memo on the revival of the American steel industry.
President Donald Trump took to Twitter Monday to boast about new plants amid robust demand. While he’s right that the industry is thriving, it’s also worth noting that gains in steel stocks since the U.S. announced import tariffs on the metal have trailed the broader market.
“Our Steel Industry is the talk of the World. It has been given new life, and is thriving. Billions of Dollars is being spent on new plants all around the country!” the president wrote on Twitter.
Some U.S. plants have been restarted, and a Federal Reserve report showed steel and iron-ore output has risen for 15 straight months. But in a year in which tariffs have helped fuel a 32 percent surge in domestic steel prices, U.S. producers’ shares have struggled amid investor concerns over the demand outlook and a lack of confidence in the higher steel prices, said analysts including Phil Gibbs at Keybanc Capital Markets.
“People are fearful of global demand being hurt with all this trade friction with China, and fearful that input costs are rising at a very rapid pace,” Gibbs said by phone. “High prices can be good for short-term profits, but higher prices can also stymie demand. If that happens, steel being a global demand proxy is right in the crosshairs.” The S&P Supercomposite Steel Index of 13 producers is down more than 8 percent since the levies were announced on March 1, compared with an 8 percent gain for the broader S&P 500 Index. The steelmaker gauge is little changed this year.
Trump has made blue-collar industries like coal and steel a centerpiece of his platform, promising a return to the days of rapid expansion in U.S. manufacturing. The S&P gauge of steelmaker shares is up more than 30 percent since Trump won the November 2016 election, compared with about 36 percent for the broader equity market.
In addition to gains on Trump’s promise for “bold action” to stem a flood of imports from China, the domestic industry has benefited the past few years from a resilient global economy and a series of anti-dumping measures handed down from the Obama administration. The S&P steelmakers gauge rose 71 percent in 2016.
“At the very least, the tweet is more right than wrong,” said Jeremy Sussman, an analyst at Clarksons Platou Securities. “Steel imports
the retailer’s website, though a sale and extra discounting brought the price to $55.99. The package back says the set is made in India.
Amazon.com Inc. and Bed Bath & Beyond are among other retailers that carry products from closely held Sunham, which was founded in Hong Kong in 1962.
The TDA also recommended that the Texas Attorney General and Federal Trade Commission investigate further and, if they determine deception occurred, “prosecute said actions to the fullest extent of federal and state law.”
The state’s Agriculture Department can enforce penalties on Texas-based companies, according to spokesman Mark Loeffler. But in situations where a company is based outside of the state, it refers the case to the Attorney General’s office and the FTC.
Kayleigh Lovvorn, a spokeswoman with the Texas Attorney General’s office, confirmed receipt of the letter, though declined to comment further. A spokesman for the FTC declined to comment.