US metal producers gain, European peers slide on Trump’s tariff plans
By Shivansh Tiwary and Medha Singh
(Reuters) -Shares of U.S. steel and aluminum producers surged on Monday, while their European counterparts fell after President Donald Trump disclosed plans to impose an additional 25% tariff on import of the metals.
Nucor, Steel Dynamics and Cleveland-Cliffs rose between 6% and 13%, while Century Aluminum added 15% and Alcoa 6%. U.S. Steel gained 3%.
American steelmakers have been grappling with subdued demand for their products as an influx of cheaper imports forced them to cut prices and idle mills.
Trump said he would unveil the new tariffs on Monday. Nearly a quarter of all steel used in the U.S. is imported, with the bulk of it from neighboring Mexico and Canada or close allies in Asia and Europe such as Japan, South Korea and Germany.
“Tariffs do concern me going into our busy season that they will cause delays and higher prices from our domestic sources,” said Todd Miller, president at Isaiah Industries, a manufacturer of metal roofing.
Steel manufacturers are trying to bring their supply chain closer or into the U.S. to offset the impact of a tariff hike, which Citi Research said would raise import costs by about $150 per ton.
ArcelorMittal, the world’s second-largest steelmaker, is planning to build a manufacturing facility in Alabama to supply to the automotive sector, one of the largest buyers of domestically produced steel.
South Korea’s Hyundai Steel is also planning a plant in the U.S.
Shares of ArcelorMittal and Voestalpine fell 2% each, while Germany’s Thyssenkrupp and Salzgitter were trading flat.
Additional tariff on aluminum import is expected to boost U.S. domestic production to around 1 million metric tons a year from nearly 750,000 metric tons, J.P.Morgan analysts said, similar to the rise seen during the 2018 tariff war.
But the U.S. will still depend heavily on imports to meet its annual aluminum demand of about 5 million metric tons, a metal widely used in the aerospace sector, which has been grappling with its own supply chain challenges.
“The proposed tariff would add nearly 30 cents/lb in duty at current aluminum prices, not including transportation and other costs,” the brokerage said in a note on Monday.
Shares of steel producers in Asia also fell, with India’s Tata Steel and JSW Steel down 3.2% and 2.3%, respectively.
In his first term, Trump imposed tariffs of 25% on steel and 10% on aluminum, but later granted several trading partners duty-free exemptions, including Canada, Mexico and Brazil.
“It is reasonable to assume that the producer will be able to pass on most of the cost to the U.S. importer,” said Nigel Driffield, professor of international business and strategy at Warwick Business School.
“As steel is largely an input into other products or processes, this will simply put the price up for U.S. users.”
(Reporting by Christoph Steitz, Paolo Laudani, Isabel Demetz, Medha Singh, Shivansh Tiwary and Aatreyee Dasgupta; Editing by David Goodman, Saumyadeb Chakrabarty and Arun Koyyur)