Uptick in Steel Imports Causes Rout in Steel Sector

I guess investors didn’t like STLD’s quarter.

Their cap utilization came in at 95%, awfully healthy. Pricing improved. Non-residential demand was steady. But the overall picture painted by Steel Dynamics was cautious, suggesting 2016 would be weak, spearheaded by pervasive weakness in the energy and agriculture sectors. Import levels are down 25% year to date, but they’re seeing an uptick, as prices rise. Nevertheless, they do not feel U.S. markets will get flooded with cheap, disgusting, Chinese steel again.

On the news of a potential uptick in imports, this sector is undergoing severe profit taking, with losses crushing the hopes and dreams of holders in ZEUS, AKS, VALE, MT SCHN, RIO, HAYN, CMC and X.

Frankly, the losses are widepsread and without geographic considerations, which leads me to believe investors are simply looking for an excuse to take profits. Steel being one of the hottest sectors of 2016 is cooling off a bit today, off by 3% overall.

Year to date, steel prices are up 75% and iron ore upwards of 35%.