With its midyear recovery already in doubt, the American steel industry now has a little more to worry about with each passing day a strike drags on at General Motors Co.
Analysts at UBS Group AG remain cautious on domestic steelmakers such as U.S. Steel Corp., arguing in a report that the market likely has weakened since producers provided worse-than-expected guidance last month. Compounding the concern is the GM strike because the automaker represents roughly 5 per cent of annual steel demand in the U.S.
“Kind of the way to think about it is each day GM isn’t producing cars is one more step towards that roughly 5 per cent of annual demand,” Cleve Rueckert, an analyst at UBS, said Monday in a phone interview. Optimism has been fading for steelmakers more than a year after the introduction of tariffs meant to bolster the industry. The U.S. trade actions encouraged companies to expand capacity by investing in new mills or upgrading aging assets, leading to fears of oversupply. Despite the hope in July that new steel-price gains may stick, faltering economic growth and U.S.-China trade tensions have dented prospects for the metal.
“Right now we’re struggling to find positive catalysts to support steel prices,” UBS’s Andreas Bokkenheuser, who co-authored the report with Rueckert, said by phone.
Another terrible UniforTheUnion lead problem. Once again they screw the workers