U.S. steel producers are facing a tough time. Weekly production has fallen to levels not seen in a number of years and, at the same time, imports have soared.

For the first two months of 2015, finished and total steel imports were up 36% and 24% respectively from the same period last year. And the estimate was that, in February, the market share of finished steel imports was some 33%.

The silver lining, however, is that production is down. By the end of February, total weekly steel production in the U.S. had fallen by 3.4% bringing it to its lowest level for five years, but indicating that the industry is responding.

Furthermore, the surge in imports was driven by U.S./global pricing differentials which now no longer exist and demand in the U.S. (except from the energy sector) is reasonably strong.

Steel Pricing Differentials

Source: Bloomberg, data as of 6 March 2015

About the Author:
Samuel R. Halpert is an analyst at VanEck specializing in the agriculture, coal, steel, forest products, and tanker sectors. Prior to joining VanEck, Mr. Halpert was employed by Goldman Sachs as an analyst/trader for a global macro hedge fund. He was previously Vice President of Institutional Futures Sales at Salomon Smith Barney where he covered Steinhardt, Omega, Kingdon Capital, Soros Fund Management, and Tudor.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.