Market Monitor Steel USA 2017

Monitor de Mercado

  • USA
  • Metales,
  • Acero

14 nov 2017

While in general insolvencies are not expected to rise sharply, an increase in business failures in Puerto Rico and the Houston area cannot be ruled out.

  • A rebound, but market conditions remain shaky
  • Payment delays expected to increase in certain regions
  • Major import tariffs on steel imports are still an issue

Market Monitor Steel 2017 USA pic1

In 2015 and in H1of 2016 the US steel and metals sector´s revenue performance was severely affected by the lower cost of imported steel and decreasing demand from the oil/gas industry, which suffered from the oil price decline. The latter has particularly affected the oil country tubular goods (OCTG) sector.

Since H2 of 2016 a modest rebound has started as steel prices increased again and demand from the OCTG sector stabilised, with more oil rigs added each month in 2017 and old inventory being sold and newer products being purchased by suppliers. At the same time, demand from automotive and construction has remained robust, although we expect demand from automotive to flatten out in the coming six to nine months. According to the World Steel Association, US steel production decreased 0.3% in 2016, but rebounded 2.4% in the period January-August 2017. US steel demand is forecast to increase by about 3% annually in 2017 and 2018 after a 4.7% decline in 2016 as robust US economic growth is set to continue.

Profit margins of steel and metals businesses have stabilised again after a substantial deterioration in 2015 and H1 of 2016. Financing requirements and gearing are generally high in this industry, and banks have become increasingly willing to provide loans to businesses after a more restrictive stance in 2015 and 2016. While the overall financial and credit conditions are generally stable, steel/metals companies still must be financially very viable in order to obtain their preferred lending terms and interest rates.

The average payment duration is, on average, 30-45 days domestically and 60-90 days for businesses abroad. Payment delays and defaults have stabilised after increasing in 2015 and 2016, when the cash flow of end-buyers was impacted by lower growth, especially in the OCTG sector. Steel and metals insolvencies have remained stable over the last six months, and are not expected to increase sharply in 2017 and 2018. However, an increase in both payment delays and business failures in Puerto Rico and the area around Houston with its large oil industry cannot be ruled out. Both places have been severely affected recently by natural disasters (hurricanes Maria and Harvey). While the Houston area has recovered relatively well, issues in Puerto Rico are expected to last at least one year before a return to normalcy. Therefore, we expect payment delays and business failures, especially on the island of Puerto Rico, to increase.

Market Monitor Steel 2017 USA pic2

Our underwriting stance for the steel and metals sector is neutral to restrictive as, despite the recent improvements, the industry has suffered a significant downturn in 2015 and early 2016. The financial situation of many businesses has just begun to stabilise, while the market environment remains volatile, with cheaper steel and metals imports still remaining an issue. We closely monitor the situation in the Houston area and Puerto Rico, where suppliers need to closely monitor and verify payment practices to make sure companies have sufficient resources to support the rebuilding process.

A major country-wide infrastructure improvement scheme announced by the US government would certainly help the sector, while the on-going rebound of energy sector investments could turn out to be limited due to increased efficiency of shale producers.  

Market Monitor Steel 2017 USA pic3

US steel mills still run at just about 75% of capacity, and in August 2017 major US steel producers urged the Trump administration to impose import tariffs under Section 232 of the Trade Expansion Act of 1962 (which allows the US president to adjust imports unilaterally should the US Department of Commerce find evidence of a national security threat from foreign shipments). However, the US steel and metals industry is divided over this issue, as many steel/metals traders and users are relying on (cheaper) imports of metals and steel. Any major import restrictions could also lead to retaliatory actions by major trading partners like the EU or China. In September 2017 the US administration finally announced that it has postponed any decision on steel import tariffs until after the passing of comprehensive tax reform.

Documentos relacionados

Disclaimer y Buró de Entidades Financieras

Este informe se presenta, con fines de información únicamente y no está pensada como una recomendación en cuanto a las transacciones particulares, inversiones o estrategias en modo alguno a cualquier lector. Los lectores deben tomar sus propias decisiones independientes, comerciales o de cualquier otro tipo, con respecto a la información proporcionada. Aunque hemos hecho todo lo posible para garantizar que la información contenida en este informe sea obtenida de fuentes confiables, Atradius no es responsable por los errores u omisiones, o por los resultados obtenidos del uso de esta información. En ningún caso Atradius, sus corporaciones o empresas relacionadas, afiliadas y subsidiarias, ni los socios, agentes o empleados, serán responsables por cualquier decisión o medida adoptada con base en la información en este informe, o por ningún daño directo, indirecto, especial, incidental o consecuente, resultante del uso de la información de las declaraciones hechas en este documento. BURÓ DE ENTIDADES FINANCIERAS ¿Qué es el Buró de Entidades Financieras? Es una herramienta de consulta y difusión con la que podrás conocer los productos que ofrecen las entidades financieras, sus comisiones y tasas, las reclamaciones de los usuarios, las prácticas no sanas en que incurren, las sanciones administrativas que les han impuesto, las cláusulas abusivas de sus contratos y otra información que resulte relevante para informarte sobre su desempeño. Con el Buró de Entidades Financieras, se logrará saber quién es quién en bancos, seguros, sociedades financieras de objeto múltiple, cajas de ahorro, afores, entre otras entidades. Con ello, podrás comparar y evaluar a las entidades financieras, sus productos y servicios y tendrás mayores elementos para elegir lo que más te convenga. Esta información te será útil para elegir un producto financiero y también para conocer y usar mejor los que ya tienes. Este Buró de Entidades Financieras, es una herramienta que puede contribuir al crecimiento económico del país, al promover la competencia entre las instituciones financieras; que impulsará la transparencia al revelar información a los usuarios sobre el desempeño de éstas y los productos que ofrecen y que va a facilitar un manejo responsable de los productos y servicios financieros al conocer a detalle sus características. Lo anterior, podrá derivar en un mayor bienestar social, porque al conjuntar en un solo espacio tan diversa información del sistema financiero, el usuario tendrá más elementos para optimizar su presupuesto, para mejorar sus finanzas personales, para utilizar correctamente los créditos que fortalecerán su economía y obtener los seguros que la protejan, entre otros aspectos. Puedes consultar la información relativa al Buró de Entidades Financieras, tanto de Atradius Seguros de Crédito. S.A., como de todo el sector asegurador en el siguiente enlace: