Steel Stocks Take Beating

[dowmike + 37]

Steel stocks took a beating yesterday with all the talk of averting a full-blown trade war with EU. Still trading down today. Here are the big ones: 

 

[TraderTate + 186]

saw that. but doesn't make much sense to me. correct me if I'm wrong, but the steel tariffs are staying in place, regardless of the newfound love between EU and US. They're just saying there won't be any new tariffs. 

[Jan van Eck + 7,558]

5 hours ago, TraderTate said:

saw that. but doesn't make much sense to me. correct me if I'm wrong, but the steel tariffs are staying in place, regardless of the newfound love between EU and US. They're just saying there won't be any new tariffs. 

I suspect you are going to see the tariffs used as a proxy or stand-in for market quotas  (and eventually the tariffs may come off entirely, and replaced by quotas).  I see it as cast in stone that the US producers are going to have a protected domestic market for basic steel.  That is part of the ideology of the Trump Administration.  Now, where does this go for specialty steels such as stainless and tool steel?  If there is insufficient (or no) capacity for specialty grades, then there is going to be an open market, but only for those grades. Structural steel, pipe steel, rail steel, coiled steel, flat plate - hey, you buy American or you go without.  

By the time this shakes out, the American steel industry is going to be a big, muscular player, with plants opened up and thousands at work. There is zero possibility that offshore producers are ever again going to be allowed to dump steel into the US market - no chance. That is just not in the political cards  (at least, until the Republicans are out and some Clinton clone comes in.  At that point, you can anticipate a reversion to the slow grinding destruction of heavy basic industry, which for incomprehensible, bizarre, ideological reasons, the Clintonites actually seem to like.  I have never been able to figure that one out.)