International credit rating agency Moody’s has stated in a report that US steel prices are unlikely to test the lows reached in the past year, despite recent price declines thanks to the US International Trade Commission’s determinations in favor of the domestic industry in recent unfair-trade cases which have led to significantly reduced imports in several product categories. However, Moody’s noted that import tariffs are likely to remain a buffer against price slides, but they are not a solution.
Moody’s stated that positive outcomes in unfair-trade cases led to a substantial decline in imports from November 2015 through April of this year and along with capacity curtailments and higher raw material costs supported rising steel prices through June. However, in the past few months prices have dropped again on the back of continued weaker demand from the energy, mining and industrial equipment sectors, as well as price decreases for scrap. In addition, the recent spike in imports from countries unaffected by recent trade cases signals that the positive effects of the cases will be limited unless there is a significant rebalancing of the global steel supply-demand equation.