Steel Stocks Rise, China Tariffs Delayed

Julija A. Image
ByJulija A.
August 14, 2019

US steel stock prices rose sharply August 13. Stocks rose in June and July after hitting a 52-week low in May, but have fallen in August amid fears of a trade war with China.

August has been somber for America’s steel companies. As of the 12th, US Steel and AK Steel had fallen 22.4% and 15.8% during August. Nucor and Steel Dynamics fell 9.3% and 13.1%, and SPDR S&P Metals and Mining ETF fell 8.7%. US Steel, Nucor, and Steel Dynamics are trading with year-to-date losses. AK Steel is still in the green for the year, but all of these steel companies closed with losses despite Section 232 tariffs that Trump introduced.

Steel companies’ profit is related to steel prices, and since prices started to fall in the second half of 2018 the stocks have been doing badly. Prices began rising this year, but US Steel announced plant closures in June after spot steel prices fell again. Prices started recovering again at the end of June and July. The companies' stocks also rose with the prices, but the escalating trade war is still suppressing recovery.

The Trump administration has delayed its proposed tariffs on Chinese goods, declaring it will push them to December. Previously, the government planned to introduce a 10% tariff on $300 billion worth of Chinese goods in September.

The US declared China a currency manipulator in August, and the American Iron and Steel Institute supported the move. The institute also welcomed the Section 232 tariffs last year, but steel stocks kept dropping despite the tariffs. China’s economic growth is also slowing down, and Chinese steel prices have been weak. It’s unlikely that US steel prices will continue to rise amid weak global sales. Since June and July marked a period of relative peace in the China-US trade war, the calm and low supply-chain inventories helped US steel companies increase their prices.

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Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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