U.S. steel shares jump as Trump orders probe of imports




  • In US
  • 2017-04-20 22:32:44Z
  • By By Caroline Valetkevitch

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. steel stocks rallied on Thursday as President Donald Trump began a probe into whether imports of foreign-made steel are a national security risk.

U.S. Commerce Secretary Wilbur Ross said the investigation was a response to Chinese exports of steel reaching 26 percent of the U.S. market.

At a White House meeting that included executives of several U.S. steel companies, Trump signed a directive asking for a speedy probe under section 232 of the Trade Expansion Act of 1962. The law allows the president to impose restrictions on imports for reasons of national security.

The S&P 1500 steel index <.SPCOMSTEEL> shot up 5.2 percent, its biggest daily percentage gain since Nov. 22, as the rally accelerated after the midday signing of the executive order.

Steel shares had surged after the Nov. 8 U.S. election on optimism over increased infrastructure spending under Trump, but the steel index had been drifting lower since February.

Investors in recent months have begun to question how soon Trump's pro-growth policies might be implemented, while steel analysts said declining iron ore prices and other factors have weighed on industry shares.

Shares of Steel Dynamics , which posted results late Wednesday, were up 6.8 percent, while Nucor , which reported early Thursday, rose 4.7 percent.

Shares of AK Steel jumped 8.6 percent while U.S. Steel rose 7.4 percent.

More stable iron ore prices and earnings might have also boosted the sector, though the Trump administration's news likely served as a "symbolic positive," said Phil Gibbs, equity research analyst, KeyBanc Capital Markets.

"People took it to be a positive because (while) the last couple of trade cases maybe didn't go the side of U.S. producers, there still is some support from the government for this industry and ... the group had been a sizable underperformer through most of the last two months."

Over the long haul, China will remain a crucial factor in steel prices, he added.

Investors who had shorted the stocks also could have been covering their positions, Gibbs said.

Total global short interest in steel shares as of Wednesday was $8.1 billion, up $128 million, or 1.54 percent, over the prior 30 days, according to S3 Partners, a financial analytics firm.

The U.S. statute has been used to restrict imported oil, while former President George W. Bush attempted to slap tariffs on steel imports in 2002 under a different means, according to a research note from Height Securities.


(Reporting by Caroline Valetkevitch; editing by Nick Zieminski and Richard Chang)

COMMENTS

More Related News

Trump won places drowning in despair. Can he save them?
Trump won places drowning in despair. Can he save them?

One-hundred-fifty baskets of pink petunias hang from the light posts all over this city, watered regularly by residents trying to make their community feel alive again. A local artist spends his afternoons ...

Steve Bannon fired a warning shot on his way out of the White House
Steve Bannon fired a warning shot on his way out of the White House

Steve Bannon says now that he has left the White House, he will go to war against President...

Citing Trump remarks, entire president
Citing Trump remarks, entire president's arts council quits

NEW YORK (AP) - Another presidential advisory committee appears to be breaking up.

Anti-Muslim Australian senator wears burqa in Parliament
Anti-Muslim Australian senator wears burqa in Parliament

CANBERRA, Australia (AP) - An Australian senator provoked an angry backlash from lawmakers by wearing a burqa in Parliament on Thursday as part of her campaign for a national ban on Islamic face covers.

Donald Trump
Donald Trump's die-hard supporters show no signs of straying

They wash their hands of neo-Nazis and wag their fingers at leftists. They denounce a press corps they see as biased and controversies they view as manufactured. But in the frenzied blame game over the ...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: US

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.