Global steel dynamics and market factors 

In June, the US Steel company announced to temporarily halt operations at its blast furnace, which is considered a move in contrast to what President Trump has boasted about.

He had said the tariffs were helping American steel mills to revive. Amid a weakening economy, the price of metal significantly declined as the demand declined in the consumer sectors - agriculture, energy, and auto.

President Trump introduced 25 per cent tariffs on imports and 10 per cent on aluminium imports, citing security concerns, and the duties remained in effect for most suppliers, including China, with a limited number of exceptions for Mexico and Canada.

In the last year, the steel price fell from 2018 to 2019 due to weakening demand from Europe and the US. Even Arcelor Mittal announced it would be idling the mills in Europe.

The price of metal declined from over $900 a short ton to less than $600 a short ton, and demand has declined globally. The tariffs increased consumer goods prices, whereas, in most parts of the world, Steel is traded at a competitive price.

The US imposed duties on Vietnam's steel.

In July first week, the US Commerce Department announced to impose duties up to 456% on produce from Taiwan and South Korea that is shipped to Vietnam for processing and, finally, exported to the US.

America imposed duties on Taiwanese and South Korean products in December 2015; on the contrary, with minor processing in Vietnam – the produce from these countries is being traded, circumventing the anti-dumping and anti-subsidy duties.

The shipment of corrosion-resistant & cold-rolled Steel from Vietnam increased significantly compared to the previous period; hence, the US government announced the new duties. The Vietnam Steel Associations said the new EU Vietnam FTA would help the sector expand European exports.

In China, the production of crude metal increased by 10.3 per cent YOY, which was 52.5% of the global production, and America contributed only 4.7% of the global production in the last year.

Is this the right time to invest or not in Steel?

At the start of the year, it was assumed 2019 would be a great year for the steel industry, but the stocks have been turning around, and one of the best in the category was Nucor, which was 6 per cent up but below 17 per cent of the S&P 500 Index, and US Steel was 16 per cent down.

Some factors contributing to the sector's poor performance include the renewed trade tensions with Mexico and the trade war where the global market demand and prices have been redefined.

Mexico has been one of these biggest concerns for the metal makers that is a major vehicle manufacturer and an important customer of the US.

Steel is, basically, cyclical and undergoes multiple economic ups and downs. Some investors consider this a buying opportunity, but some may wait for a later market slowdown to get lower price options.