Shares in US steel companies advanced after President Donald Trump signed an order directing a probe into whether steel imports from China and other foreign countries were a threat to US national security in his latest attempt to reinvigorate the American steel industry.
Commerce secretary Wilbur Ross will lead the investigation, which could provide the basis for wider import restrictions, for which US steel providers have long advocated, arguing that cheap Chinese steel, in particular, hurts domestic production and workers.
Shares in AK Steel Holding were up 5.6 per cent to $6.63 on Thursday, while shares in United States Steel Corporation and Steel Dynamics were both up more than 4 per cent at $29.70 and $34.03, respectively. Nucor also gained 2.3 per cent to $58.93.
The price differential between US and China has been steadily raising in recent months, increasing the demand for Chinese imports, according to Citibank analysts. The price, rather than protectionist sentiment, is likely to remain the key driver of Chinese steel imports, unless US prices are lowered.
“It’s a very serious impact on the domestic industry,” Mr Ross said in a White House press briefing, saying repeated claims by China that it would reduce its steel capacity were false.
However, the Citi report showed the US makes up a tiny portion of Chinese steel exports, at only 2 per cent of the total. China’s neighbors, meanwhile, absorb 60 per cent of its steel exports.
The investigation is the latest move by the Trump administration to protect American steel and part of his broader ‘America first’ strategy. On Monday, Mr Trump also signed an executive order requiring all federal construction project use American steel, while late last month he also ordered tougher enforcement of anti-dumping laws.
Thomas Gibson, president of the American Iron and Steel Institute, said foreign imports has cost the US 14,000 steel jobs and that the new probe was an “impactful way to help address the serious threat”.