All of this is great news for steel companies. ArcelorMittal, the world's largest steel producer, just dramatically hiked its forecast for how much steel China is going to buy this year. Originally, the company predicted a 1 percent decline in Chinese purchases. Now it anticipates a 3.5 percent rise, according to the company's latest earnings report.
That big bump is helping U.S. companies, too. American steel company Nucor just had its most profitable first-half of a year since the Great Recession, and U.S. Steel greatly exceeded expectations when it reported results at the end of July. "We are seeing a pickup in demand for steel products and iron ore in China," says Lourenco Goncalves, chief executive of Cliffs Natural Resources in Cleveland.
For the American steel industry, this is an odd turn of events. For years, American steel companies have portrayed China as a villain. They have lobbied both Republican and Democratic presidents to fight against Chinese steel. There are already several tariffs in place on some steel products. Those have also helped boost prices, steel companies say.
Trump wants to go even further. He has called the United States a "dumping ground" for foreign steel that is subsidized by foreign governments and sold at steep discounts. He vowed to act quickly with tariffs or quotas. The White House said a report was coming by the end of June. It's now August and steel CEOs are still waiting.
“This is in the government’s hands. They know what needs to be done,” Dave Burritt, president and chief executive of U.S. Steel, said recently.
Contrary to popular belief, the United States no longer buys much steel directly from China. In 2016, the top countries the United States imported steel from were Canada, South Korea, Brazil and Mexico, according to Commerce Department data. China was way down in 10th place for steel imports. It's one of the reasons Commerce Secretary Wilbur Ross has called the issue so "complex." Putting tariffs on China is one thing; putting them on long-time allies like Canada and South Korea is another.
Some experts say if Trump only puts a tariff on Chinese steel, it might not have much impact on prices. Out of all the steel the United States uses, China only supplies about 1 percent of it. On top of that, China is selling a lot less steel on world markets these days since it needs more steel at home. Exports are down about a quarter from last year.
"If the tariff were confined to China only, its effect on the overall steel industry likely would not be that impactful given China's small share at present of the overall American steel market," wrote Jay Bryson, global economist at Wells Fargo Securities, in a recent research note.
Like many CEOs in the metal business, Goncalves is still urging Trump to put tariffs or quotas on foreign steel. He sees the relief from China as temporary, "China will do what's good for China." U.S. steel mills are currently running at about 75 percent capacity, according to the American Iron and Steel Institute. Even with stronger Chinese demand, American steel companies could still make a lot more.
“The only people who ever say there’s no capacity to produce more U.S. steel are the ones bringing in foreign steel,” says Mike Emerson, chief executive of Huntington Steel in Huntington, W.Va. He predicts if Trump announces a tariff or quota, there will be a 30- to 60-day impact on prices. Then it will settle down. “Either mills will produce more or companies that need steel will change the type of steel they use to what is available.”
There's evidence that companies that use steel -- everyone from car manufacturers to gym equipment makers -- are already eyeing their options to move from foreign steel to American suppliers in anticipation of Trump's next move. Searches for North American steel suppliers have soared several times this year when Trump or the commerce secretary talked tough on trade, according to ThomasNet, a database of North American industrial suppliers that's been around for over a century.
"We've certainly seen auto and aerospace companies searching for alternative suppliers, but it's been fairly broad based," says Tony Uphoff, chief executive of ThomasNet. The company's Thomas Index shows a surge in searches for North American steel suppliers right after the election, right after Trump's inauguration and again in late June when Wall Street and Washington were buzzing about a tariff coming soon.
But Trump himself dashed hope for a tariff anytime soon when he told the Wall Street Journal at the end of July, "We don’t want to do [them] at this moment."
The president said his team was "waiting till we get everything finished up between health care and taxes and maybe even infrastructure." A Commerce Department spokesman didn't return requests for any further updates on when an announcement might come. What once seemed like a top priority is now a big question mark.
The Washington Post called some domestic steel mills in recent days to ask how sales are doing. The most common responses were: “People are on edge” and “Delay is the topic of the day.”
“What we’re seeing out in the market place is just a lot of uncertainty,” says Ken Carlton, president of Corrugated Metals in Belvidere, Ill.
Investors are growing bearish on the sector. The stock prices of major American steel companies -- U.S. Steel, AK Steel, Nucor and Steel Dynamics -- jumped in July as a tariff seemed likely and the strong second-quarter earnings came in. But after Trump said the White House is "waiting" to act, the stocks sold off.
U.S. Steel is now down 25 percent this year. The share price drop helps explain why CEOs keep lobbying the Trump administration for action. “This country has been in a trade war for decades and it needs to end now,” said Burritt of U.S. steel.
The steel industry wants prices even higher than they are now. They think a broad-based tariff is the best way to get there. While U.S. steel prices are far better this year than they were in 2015 when the industry was really suffering, prices aren't at record levels. Hot-rolled band steel, for example, is selling at $681 a tonne. That's about half the price in the summer of 2008 when it hit a record of $1,203 a tonne, according to SteelBenchmarker.
China is providing some relief this summer, but the steel industry is waiting for its Trump bump.