On Tuesday 28 February, the President of the United States of America Donald Trump declared that he wanted to impose duties equal to 25% and respectively 10% to steel and aluminum imports. Trump's stark position for the protectionism of local heavy industry has been strongly criticized not only abroad but also within his own party so much that he induces his economic adviser Gary Cohn to resign.
This internal war would seem to worry markets more than what the real effect would have on a global scale. For example, China, despite being the main exporter of these metals, appears to be outside the top ten importers' positions in the United States. Rather than triggering a real trade war and inciting the country that holds 63% of the Treasuries, Trump's words seem to regain consensus within America itself.
Its popularity has in fact reached a historically particularly low level and, with at the door the "Mid Term Elections" that will see the re-election of 435 representatives of the Lower House of Congress and 34 Senators, the President has a strong need to regain consensus. Particularly, the "recovery" of voters in the Midwest states, where the main steel mills are located, is predictably the main reason for this decision.
The reactions of the markets are therefore to be considered rather short-term; however, in the metallurgical sector there are possible beneficiaries of this protectionist policy.
Which investments could be interesting in the medium term?
Nucor Corporation, the leading steel producer in the US, pays a 2.24% dividend. Profits at the end of 2017 were slightly below expectations due to climatic problems that hindered supplies, but the fundamental solid and a 7% increase in the automotive sector leave hope for good future results.
Steel Dynamics, a steel producer and recycler with a good cash flow recently led the Board to approve a significant increase in the dividend. Possible acquisitions and the possible vertical integration of OmniSource, a company that supplies 60% of the raw material, could further support the stock. United States Steel State Corp, a company with a long history behind it whose foundation dates to 1901. It supplies steel products and solutions for infrastructures, containers and industrial machinery.
United States Steel State Corp,a company with a long history behind it whose foundation dates to 1901. It supplies steel products and solutions for infrastructures, containers and industrial machinery.