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US Steel market outlook darkens - Morningstar-The 19th China(Guangzhou)Int’l Metal &Metallurgy Exhibition
7/27/2017  steel expo-metal &metallurgy expo
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     While the steel market still awaits the US Commerce Department’s findings under  its Section 232 investigation, Morningstar has issued a downbeat outlook for the  steel market, and the value of American steel companies.
Morningstar analysts are pessimistic on steel. In a note, they said that “Trump‘s  protectionist leanings, highlighted by an announced investigation into whether  high volumes of imported steel represent a threat to U.S. national security, have  proved to be a boon to steelmaker stock prices in 2017. We contend that weak  fundamentals will eventually win out, however, as substantial global overcapacity  and decelerating fixed-asset investment in China will weigh on steel prices. As  Chinese stimulus measures have tapered, so have steel and steelmaking raw  material prices. In the near term, US steelmaker profits should remain attractive,  but we see tougher times ahead. Based on our outlook, every U.S. steelmaker we  cover is trading above fair value.”
US steelmakers have benefited from the recovery in steel prices that started in  2016, but the steel price rally and the benefit it has spread to steelmakers has  stalled. The thought is that further, tougher sanctions are necessary in order for  another rally in steel prices. Even though this is what is required, there are doubts  over what the long term impact of tighter trading regulations will be if they are  implemented.
If the Commerce Department does find that cheap steel imports are a matter of  national security, and if Donald Trump implements sweeping trade reforms, it is  very likely these moves will be met with a WTO complaint, and that could dilute their positive impact on steel prices. -The 19th China(Guangzhou)Int’l Metal &Metallurgy Exhibition
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