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Steel prices in the U.S. have stalled after hitting their highest level in a decade in early June, a sign to some analysts that companies facing higher input costs could soon get some relief.
U.S. hot-rolled coil steel prices have fallen to about $850 a ton since hitting a fresh multiyear high of $935 on June 11, with investors assessing the full impact of tariffs on steel and aluminum imports. Thousands of requests for exemptions from the tariffs have been filed, and analysts are also trying to determine if protectionism will slow the global economy and lower demand for materials.
Analysts also say the surge in domestic prices so far this year means U.S. steel is so far above global benchmarks that some companies will likely opt to pay the Trump administration’s 25% import tariffs. Some think domestic steel makers could also ramp up production, lowering prices.
And the situation keeps changing. President Trump said Wednesday the U.S. and European Union would resolve steel and aluminum tariffs.
The various factors have unnerved some investors and hurt shares of steel producers, which have lagged behind the commodity. U.S. Steel shares were down 3.3% in after-hours trading Wednesday. Nucor Corp. and AK Steel Holding Corp. also fell.
“The uncertainty is the killer,” steel analyst Charles Bradford of Bradford Research said. “People are sitting on their hands waiting to see what happens.”
Calmer steel markets could be a boon for some manufacturing companies contending with uncertain metals costs. Although many have existing supply deals in place and won’t feel the impact of the levies until next year, others are starting to increase cost estimates.
Whirlpool Corp. cut its full-year profit outlook earlier this week as its costs continue to rise, with CEO Mark Bitzer saying that domestic steel prices “have reached unexplainable levels.” Shares fell 15% on Tuesday, their largest one-day drop since 1987.
On Wednesday, Detroit’s Big Three auto makers—General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV—lowered their profit outlooks for 2018, and each said fallout from U.S. tariffs on steel and aluminum is weighing on their bottom lines.
Some analysts expect those prices to come down, but even a moderate decline could keep prices elevated. Citigroup expects domestic steel to remain around $850 a ton in the second half of the year, which could challenge industrial firms negotiating new contracts.
“We’re actually not seeing the full impact in 2018 of what the steel or aluminum tariffs are, and it’s anybody’s guess how long those stay in place,” United Technologies Corp. Chief Executive Greg Hayes said on the company’s Tuesday earnings call.
General Motors shares fell 4.6% on Wednesday after the nation's largest automaker lowered its 2018 profit outlook. The move fully erases gains since the end of May, when SoftBank said it would take a stake in GM's driverless car unit.
Amazon.com's market value passed $900 billion on a closing basis for
the first time ever Wednesday. The firm would need to gain another 11%
to hit $1 trillion.
On this day in 1786, the earliest known U.S. stock and bond tables were published in the Massachusetts Centinel.
The European Central Bank releases a policy statement
at 7:45 a.m. ET and central bank President Mario Draghi holds a press
conference at 8:30 a.m. The ECB is expected to signal its intention to
keep its key interest rate below zero for at least another year.
U.S. durable goods orders for June, out at 8:30 a.m., are expected to rise 3% from the prior month.
U.S. jobless claims, also due at 8:30 a.m., are expected to tick up to 215,000.
International trade in goods, due out at 8:30 a.m., is expected to show the goods deficit widened in June.
U.S. Trade Representative Robert Lighthizer appears before the Senate Appropriations Committee at 9:45 a.m.
The U.S. Energy Information Administration is expected
to report at 10:30 a.m. that natural gas storage levels rose by 34
billion cubic feet, less than the average for this time of year.
The Kansas City Fed Manufacturing Index for July is out at 11 a.m.
President Trump travels to Granite City, Ill., where
he is scheduled to give remarks on trade at U.S. Steel's Granite City
Works at 3:05 p.m. U.S. Steel restarted some operations at the site as
Mr. Trump imposed tariffs on steel and aluminum.
President Donald Trump and European Commission President Jean-Claude
Juncker speaking in the Rose Garden of the White House on Wednesday.
PHOTO: Alex Edelman/Zuma Press
The president and the EU turned down the heat on trade.Mr. Trump and the European Union’s Jean-Claude Juncker suggested they would hold off on further tariffs while they talk through differences. The surprise truce could be a sign of things to come.
Trade worries are making investors flee U.S. stocks.Worried about protracted trade disputes between the U.S. and China, investors are seeking safety
among assets like U.S. Treasurys, with more than $20 billion pulled
from long-term mutual funds and ETFs focused on U.S. stocks in June.
Royal Dutch Shell launched an anticipated $25 billion share buyback. The oil giant said its earnings nearly tripled in the second quarter.
More earnings are on tap today, including from:
Amazon, which has had a blockbuster year. The retail
giant forecast an operating income range between $1.1 billion and $1.9
billion, compared with $628 million a year ago. Here’s what to watch.
Comcast, which recently dropped its bid for 21st Century Fox entertainment assets, opting instead to pursue European pay-television giant Sky.
Intel, whose CEO resigned last month after violating
company policy by having a relationship with a co-worker. Analysts
expect revenue to be up 14% from a year earlier. Here’s what else to watch.
Coca-Cola "has just wrapped up a yearslong effort to divest its
bottling operations in the U.S., effectively outsourcing many shipping
and logistics tasks. The merits of this move are debatable, but the
timing is fortuitous—finishing up just as the U.S. is seeing a surge in
freight and shipping costs.
Qualcomm—Up 4.9%: Qualcomm said it would abandon
its planned $44 billion acquisition of Dutch chip maker NXP
Semiconductors after it failed to secure approval from China.
Separately, it exceeded quarterly earnings expectations.
Ford—Down 3.2%: The auto maker lowered its outlook for 2018
on Wednesday and reported a 48% drop in net income during the second
quarter, citing uncertainty in Asia and Europe and increasing commodity
PayPal—Down 3.6%: PayPal projected lower-than-expected sales for the current quarter, though the mobile payments company exceeded earnings and revenue expectations for the most recent period.
Mattel—Down 11%: The toy maker said Wednesday it plans to cut
more than 2,200 jobs, or nearly a quarter of its nonmanufacturing
workforce, and sell some foreign manufacturing sites as it deals with