EsU.S. Steel is cutting back its production capacity in North America with plans to “begin idling” its iron and steelmaking facilities near Detroit, MI including a closure of its hot strip steel mill by the end of 2020. While pitched as an efficiency-enhancement exercise it is notable that the section 232 tariffs applied by the Trump administration in Mar. 2018 – as well as the wide-range of product-specific tariffs discussed in Panjiva’s Dec. 20 research – have not prevented the closure.
That may relate to a marked decline in demand for hot-rolled products. Panjiva data shows U.S. imports of hot-rolled steel products fell by 25.8% year over year in the three months to Oct. 31 and by 33.7% in the past 12 months compared to 2016. As a result they reached their higher in total in October since Feb. 2010.
Supplies are currently dominated by exports from Canada, which accounted for 47.6% of the total after climbing 8.6% year over year in the past three months. That was followed by imports from South Korea which represented 10.7% of the total while those from Mexico accounted for 7.6%.
Source: Panjiva
One criticism of tariffs is that they’ve simply led to diversions to other markets. That’s certainly applicable in the case of exports from Mexico where U.S.-bound exports fell 9.0% year over year in October after a 22.2% decline in 3Q.
Meanwhile shipments to the rest of the world – including those shipped within Mexico – climbed 61.3% higher in October after a 26.8% surge in 3Q. As a consequence total Mexican exports climbed by 28.7% in October after rising 9.0% in 3Q.
At the supplier level, the growth in October was led by CAP SA which represented 35.7% of total shipments in the last 12 months after a 49.3% year over year surge in October. That followed by Ternium with more modest 3.6% growth and 18.6% of total shipments. Among second tier exporters, ArcelorMittal had a 4.5% share after returning to the market in 2H 2019.
Source: Panjiva
