Difficult question ! One thing for sure though Economics 101 : protectionism hurts the country that protects first and foremost. They never learn from history the politicians do they ?
My understanding is that the US is a minor producer of steel (80 million tonnes or 5% VS 1700 million tonnes worldwide production) but a major consumer of the metal (the car and construction industries the US is the largest importer of steel in the world)
How this could affect the graphite prices that go into the steel industry ?
Difficult question that requires some deep research. Probably not much impact (directly) on graphite prices. However, higher US tariffs means less steel exported to the US which means more steel available for competition and consumption to the rest of the world which would result in more oversupply and even lower prices of steel and this could put downward pressure on graphite prices. By how much ? that is the question !
IMO Large flakes high purity premium priced graphite is BSM's moat, and there is an undersupply of the stuff, so I highly doubt an oversupplied steel industry due to US tariffs would have much impact if any on this premium higher value stuff. Amorpheous graphite or lower purity, small flakes that is another story....good luck to those producing this lower value stuff...
"The steel industry represents a 24% share of natural graphite consumption. In this industry, graphite (both natural and synthetic) is used for its high temperature stability, thermal shock resistance, chemical inertness and ability to withstand corrosion. Natural graphite is used as a refractory liner for furnaces, ladles and crucibles in the continuous casting of steel and as an agent to increase the carbon content of steel. 11 Natural graphite can be substituted in the steel industry (increasing the carbon content of steel) by use of manufactured graphite powder, scrap from discarded machine shapes, and calcined petroleum coke."
In 2005, China produced nearly a third of the world's steel. By 2017, it was nearer to half the global supply.
But as China's economy slowed and the amount of Chinese domestic construction dipped, so did local steel consumption.
Prices of the metal have fallen for the past five years as excess supply in China weighted on the international market.
The US tariffs won't cause that oversupply to go away and workers in Conshohocken know that. For now, they are just grateful the US President has finally acted.
Chuck Hauer is doubtful the move will save his role, but he believes it will help the industry which he says is the "cornerstone of America".
For the wider US economy though a potential trade war could put the future of many more industries into limbo.
DETROIT (Reuters) - If U.S. President Donald Trump goes ahead with sweeping tariffs on steel and aluminum imports, it could lower profits for companies making everything from pickup trucks to canned soup, or result in higher prices for consumers.
Trump has threatened a 25 percent tariff on steel imports and 10 percent on aluminum, without exemptions for any countries.
Analysts caution that the Trump administration’s plan lacks details, but say tariffs would hurt manufacturers.
“Domestic producers of steel would make more money, while domestic consumers of steel would make less money,” said Steve DuBuc, a director at consulting firm AlixPartners’ automotive and industrial practice, noting that U.S. steel makers will “have increased pricing power” as steel imports become more expensive.
And because most aluminum is imported, costs would rise.
U.S. automakers stand to be among the most impacted. The sector accounted for 26 percent of U.S. steel demand in 2017, behind the construction industry’s 40 percent, according to data provider Statista.
When it comes to consumption by country, China once again tops the rankings.
It's followed by the EU, the US, India, Japan and South Korea, according to Worldsteel.
$29 billion
The US is the world's top steel importer. The value of steel shipped into the US was just over $29 billion in 2017.
Nearly 17% of steel imported into the US comes from Canada, according to S&P Global Platts. South Korea, Mexico, Brazil and China are also major exporters to the US.
The new tariff could put those countries squarely in the firing line.
Ben May, a director at Oxford Economics, said that 88% of Canadian steel exports went to the US in 2016. The same is true for nearly three-quarters of Mexican steel.
China would be less affected because its trade with the US is already restricted by American import controls and duties.
BSM Price at posting:
2.1¢ Sentiment: Buy Disclosure: Held
