27 April 2017 by lberuti
Steel industry credits in the US charged in the wake of Donald Trump’s election as president. The promise of heavy infrastructure spending and protectionist trade policies for manufacturing both represented major demand driver for steel suppliers, after cheap imported steel made their life difficult in recent years and stiff price competition weighted on margins. The recent struggles to pass the healthcare reform bill have led to scepticism regarding the likelihood of imminent sweeping changes to trade policy, and the market has begun to look more sceptically at the post-election surge. X ( United States Steel Corporation ) has been the most impacted, and their earning report yesterday did nothing to quell investors’ fears. Despite rising metal prices, the company announced a $180mln loss for the first quarter and cut full year guidance. While others were investing to improve technology and costs during the downturn, X was trying to save money and put off investments. To fix this deficiencies, management said it accelerated equipment upgrades, but disruption caused by these efforts will ultimately cap the company’s ability to participate in the current favourable conditions. Over the last 2 sessions, X’s 5-year risk premium has been marked 192bps wider at 673bps.