ITA numbers suggest declines, and reversal of trade deficit reductions brought on by tariffs

According to the latest report from the International Trade Administration (ITA), August 2019 steel imports were down but license data suggests the October numbers will show a significant increase in imports. Year-to-date through August, U.S. steel imports were 18.8 million metric tons, a 13.4% decrease from 21.7 million metric tons last year. In value terms, imports decreased 15.7% to $17.4 billion from $20.6 billion.

Brazil accounted for the largest share of U.S. imports by country so far this year at 18%, followed by Canada, at 16.7%, and Mexico, at 11.1%. The U.S. imported 6.3 million metric tons of flat products so far this year, accounting for 33.8% of total steel imports, the largest category of steel product imported. This was followed by semi-finished products at 25.9% and pipes and tubes at 22.4%.

U.S. steel exports have remained relatively flat for the past nine years, according to the ITA. Compared to the trade balance one year ago, the August 2019 steel trade gap has narrowed by 42.7%.

Compared with August 2018, August 2019 exports were up 0.6% by volume and down 19.8% from three years ago.

In terms of NAFTA trade, total steel imports into the U.S., Canada, and Mexico decreased 12% this year, while intra-North America steel imports and exports have been on the rise. Imports among the three countries account for a 38.3% share of total NAFTA steel imports so far this year, followed by Brazil’s share with 13.7%, and South Korea, at 8.6%.

After peaking in the third quarter of 2018, domestic steel prices have been on the downslide. U.S. domestic prices for hot-rolled band in September 2019 were down 34.5% from last year; for cold-rolled coil, they were down 21.5%; and for standard plate they were down by 22.2% from a year ago.

US steel production decreased by 0.3% to 7.4 million metric tons in August compared to the month before, marking a 1.1% decline from the August 2018 production level. Capacity utilization decreased in August 2019 by 0.3% from the month before as well as from one year ago and down 1.1% from five years ago. By November it was up slightly. (See main story  Tariffs, a manufacturing slump and the steel industry)

“Though capacity utilization has increased 38.3% points from the thirteen-year low reached in April 2009,” the ITA report noted, “it remains well below the prerecession historical averages.”

Steel demand in August 2019 decreased two percent from a year ago and six percent from five years ago. Steel demand in 2018 amounted to 100.9 million metric tons, a one-percent increase from 99.7 million metric tons in 2017.

The U.S. steel industry posted a combined net income of $472 million in the third quarter of 2019, with five out of six companies tracked by the ITA reporting quarterly gains. Nucor reported the highest quarterly net profit at $275 million, followed by Steel Dynamics at $151 million, Commercial Metals Company at $86 million, Carpenter Technology at $41 million, and AK Steel at $2.8 million. U.S. Steel reported quarterly net loss of $84 million.