S&P Global Ratings:
Recent U.S. Trade Actions Likely A Show Of Force But Neutral For Credit Quality In U.S. Steel And Aluminum Companies

By S&P Global Ratings - Michael Maggie, William R Ferara, Donald Marleau | 12 June, 2017

According to S&P Global Ratings, the Trump and Obama administrations have taken several actions in support of U.S. manufacturing and, in particular, the steel and aluminum industries over the past several months:

The Commerce Department launched two Section 232 cases to investigate if foreign imports pose a threat to national security: one for steel on April 20, 2017 (completion expected over the next several weeks), and another for aluminum on April 27, 2017. The threat is determined in part by the domestic production needed for national defense applications and the domestic industry's capacity to meet the requirements in those applications.

In January 2017, the U.S. Trade Representatives under the Obama administration initiated a World Trade Organization (WTO) action by targeting illegal aluminum subsidies by the Chinese government.

S&P Global Ratings does not view these recent policy actions as an important near-term driver of credit risk at this time because they aren't likely to either push domestic volumes higher or meaningfully improve cash flows within the sector. The steel trade cases in effect are still working their way through the system, but have in part helped lower import levels in the U.S. from all-time highs and are supporting higher steel prices.

Gain strategic insights into the impact of recent trade actions
on the U.S. steel and aluminum companies:

Aluminum could benefit more than steel from recent trade actions
A border adjustment Tax could be negative for downstream metals
U.S. and Chinese steel spreads have widened in recent months
Demand fundamentals remain supportive but some concerns are brewing
Politics trumps policy
U.S. aluminum and steel companies ratings and outlooks

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S&P Global Ratings:Recent U.S. Trade Actions Likely A Show Of Force But Neutral For Credit Quality In U.S. Steel And Aluminum Companies

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S&P Global Ratings:
Recent U.S. Trade Actions Likely A Show Of Force But Neutral For Credit Quality In U.S. Steel And Aluminum Companies