Steel Products Prices North America

Effect of Section 232 on Rolled Steel Imports Unclear

Written by Peter Wright

Total rolled product imports declined by 20.4 percent in October, versus the same month last year, measured as a three-month moving average, but the effects of Section 232 are still not clear. This early look at October’s import volume is based on Commerce Department license data (see explanation below). Figure 1 shows the tonnage of total rolled steel and semi-finished imports through October on a 3MMA basis. Evidently the tariff has had no effect on semi-finished products. Rolled product volume has declined since May, but that also occurred in the second half of last year and there are wide differences between products. So, the jury is still out.

Except for early 2016 (when the volume was very low), the import volume of semis on a 3MMA basis has ranged between 500,000 and a million tons per month for the last seven years. The volume of semis is now lower than it was in mid-2014, but has trended up since early 2016.

The volume of total rolled product imports in 2017 had a peak in June, but the year ended down 1.3 percent from where it began. The decline continued through February 2018, surged again through May and declined through October. On a 3MMA basis, October was down by 24 percent from May. In our opinion, it is still too soon to conclude that this was due to the tariffs. We need a few more months of data to reach a probable conclusion. We say probable because there are many other influences in play, not least of which are currency values, demand in the U.S. and the global supply-demand balance of individual products.

Beginning in January 2018, we have expanded this import analysis to include all major steel sectors: sheet, plate, longs and tubulars, with a total of 18 subsectors. We now publish an import market share analysis for the same 18 steel product groups. Together, these two reports should give an indication of the effect of the Section 232 trade legislation as we move into 2019. All volumes in this analysis are reported in short tons. We use three-month moving averages rather than single-month results to smooth out the variability.

There are three tables in this report. In each of them we show the 3MMA of the tonnage in October 2018 and 2017 with the year-over-year change. We then calculate the percentage change in volume in the most recent three months with the previous three months. This month, we are comparing August/ September/October with May/June/July (3M/3M). The next column to the right shows the year-over-year change as a percentage. Declines are color coded green and increases are coded red. Finally, in the far-right column, we subtract the 12-month change from the three-month change. This is a way of describing the magnitude of the recent trend as a percentage. It is not unusual for the color code of the trend to be the opposite of the two time frame analyses.

Table 1 describes the imports of all major sectors of the sheet and plate markets. In the flat rolled sectors shown in Table 1, of the big three sheet products, hot rolled is up by 20.5 percent year over year as cold rolled and HDG have declined by 33.4 percent and 10.5 percent, respectively. CTL plate has declined by 22.8 percent as coiled plate has increased by 16.3 percent. Figures 2 and 3 show the history of sheet and plate product imports since January 2004. 

Table 2 shows the same analysis for long products where the year-over-year volume was down by 17.6 percent in total, but rebar was up by 4.6 percent. Figure 4 shows the history of long product imports.

Table 3 shows that for tubular products in total the volume was down by 34.5 percent year over year and that all individual products were down by over 20 percent. Figure 5 shows the history of tubular imports since 2004.

Explanation: SMU publishes several import reports ranging from this very early look using license data to the very detailed analysis of final volumes by product, by district of entry and by source nation, which is available in the premium member section of our website. The early look is based on three-month moving averages using the latest license data, either the preliminary or final data for the previous month and final data for earlier months. We recognize that the license data is subject to revisions, but believe that by combining it with earlier months in this way gives a reasonably accurate assessment of volume trends by product as early as possible. The main issue with the license data is that the month in which the tonnage arrives is not always the same month in which the license was recorded. In 2014, we conducted a 12-month analysis to evaluate the accuracy of the license data compared to final receipts. This analysis showed that the licensed tonnage of all carbon and low alloy products was 2.3 percent less than actual receipts, close enough to confidently include license data in this current update. The discrepancy declined continuously during the 12-month evaluation as a longer period was considered.

Statement from the Department of Commerce: The Steel Import Monitoring and Analysis (SIMA) system of the Department of Commerce collects and publishes data of steel mill product imports. By design, this information gives stakeholders valuable information on steel trade with the United States. This is achieved through two tools: the steel licensing program and the steel import monitor. All steel mill imports into the United States require a license issued by the SIMA office. The SIMA Licensing System is an online system for importers to register, apply for and receive licenses in a timely manner. In addition to managing the licensing system, SIMA publishes near-real-time aggregate data on steel mill imports into the United States. These data incorporate information collected from steel license applications and publicly released Census data. The data are displayed in tables and graphs for users to analyze. Additionally, SIMA provides data on U.S. steel mill exports, as well as imports and exports of select downstream steel products.

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