Steel company stock prices decline despite Trump tariff boasts

In early December, President Donald Trump tweeted:

“…I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN”

Making good on his promise, or at least part of it, a 25% tariff on steel imports to the US was imposed March 8 of this year.

But despite the tough talk, there is little sign that the new rates have been an economic boon. And if boosting the price of US steelmakers’ shares was to be a side benefit of the tariff, in this respect it has failed – miserably.

Stock prices of some major consumers of steel haven’t been hit quite as hard, but they are also down sharply since the start of 2018.

With the year nearing a close, S&P Global Platts took a look at where stock prices were for eight key steelmakers and eight steel consumers in the US on January 2, 2018 and compared them with closing prices on December 18. On average, share prices of steelmakers have fallen nearly 31% over nearly 12 months. For context, the three big stock indices—the Dow, S&P 500 and NASDAQ—were down 4.5% for the year through Dec 18.

Over the same period, the S&P Global Platts price assessment of US-made steel hot-rolled coil increased nearly 14% to $740.50/short ton on December 18 from $652/st in early January.

Nonetheless, integrated steelmakers—mills producing steel via the blast furnace-basic oxygen furnace route—saw their stock prices plunge an average of almost 47% since January. Ohio-based AK Steel's stock was down 58.2% as of December 18. US Steel’s stock price was down 46.4% over the same period. ArcelorMittal’s stock declined by 36.1%.

Minimill producers, which make steel using recycled scrap in electric furnaces, fared somewhat better. Collectively, their stock prices were down an average of nearly 24%. Nucor—the biggest producer of steel on US soil—saw its stock price decline 17.4% by December 18. Steel Dynamics’ stock was down 28.9%, and Commercial Metals stock saw its value taper off 24.5%.

Steel consumer stock prices hit too

Stock prices at eight major steel consumers fell by an average of 30% from Jan 2 to Dec 18—collectively in line with the steel producers’ overall stock-price decline.

In fact, of all the companies registering a decline (including steelmakers and steel consumers), General Motors saw the least slippage. GM’s stock price was down 16.5% at its December 18 close. Comparatively, Ford’s stock price was down 33.1%.

Appliance giant Whirlpool’s stock closed down nearly 33% since January 2. Most other steel consumers saw stock prices fall in a range of 21-31%  from January through December—except for rail car manufacturer, FreightCar America (down 58.1%).

Bucking the downtrend was North American iron ore supplier Cleveland-Cliffs, which saw its stock price increase almost 6% in value.  As such, from January 2-December 18, Cliffs’ stock price outperformed on a percentage basis the likes of Apple, Facebook—and yes, even Platts’ own parent, S&P Global Inc (SPGI was $168.12/share on Jan 2 and closed at $167.99/share on Dec 18).

Perhaps Trump should have proclaimed, “I am Iron Man.”