AA Alcoa Corporation

By Andrew Tangel and Bob Tita 

Shares in U.S. steel producers fell Tuesday after the Trump administration pushed back a deadline to impose tariffs on imports of steel and aluminum from some U.S. allies.

U.S. Steel Corp.'s shares fell more than 6% while Nucor Corp. was off more than 2%.

Executives from both firms lobbied for duties on foreign steel and aluminum, which they said they needed to compete with cheap imports.

"Frankly we're disappointed. We were hoping for the action to be taken last night," John Ferriola, chief executive of Nucor Corp, told reporters in Washington. He said the exemptions apply to countries that account for about two-thirds of steel imports and this extension gives them "another month to get their steel into the country."

Mr. Ferriola added that he was pleased that the administration has said it won't extend the tariff exemption beyond this one month

U.S. Steel didn't respond to a request for comment.

Shares in aluminum maker Alcoa Corp., meanwhile, were up about 2%. The Pittsburgh-based company made 14% of the aluminum it produced last year in the U.S. and imports some of the metal it sells here from Canada.

"We believe vital trading partners should be permanently exempt from any tariff or quota on aluminum," the company said. "The aluminum industry has an integrated supply chain and actions should not penalize those that abide by the rules."

The White House said late Monday that tariffs of 25% on steel and 10% on aluminum from the European Union wouldn't go into effect as planned on Tuesday. Instead, the EU has another month to continue negotiating with the U.S. about a new pact to avoid the tariffs, which are already in effect against China, Russia, Japan and others. Canada and Mexico were given an extension until June 1 while the North American Free Trade Agreement is renegotiated.

The delay is fueling uncertainty for metal producers in the U.S. "Clearly more must be done to provide certainty to the market," said Heidi Brock, chief executive of the Aluminum Association trade group. "We continue to call for permanent, quota-free exemptions...for all countries designated as market economies."

Steel executives consider the tariffs on foreign steel as matter of fairness. They said opponents to the duties fail to acknowledge that U.S. steel exports face a variety of tariffs and taxes that effectively keep U.S-made products from penetrating foreign markets.

"I'm proud of the president that he finally stepped forward to do something about this," said Tracy Porter, chief operating officer for Commercial Metals Co. in Texas.

Metal-consuming companies will have to wait longer to know which countries' imported steel and aluminum could face tariffs -- and which of their suppliers might be selling metal at higher prices.

The American Institute for International Steel, a manufacturing trade group, said its members are already paying sharply more for steel and seeing longer delivery times.

"A tariff -- or the threat of a tariff -- on the imports of a product not only raises the price of the imported product, but also allows the domestic industry to raise the price of its products," the group said.

Roger Newport, CEO of AK Steel Holding, said a combination of quotas and tariffs are needed to block importers that are willing to pay the tariff to get their steel into the U.S.

"Quotas are very important," he said. "We've seen trade cases that there are countries that will pay through it."

Steel-industry executives stressed that imports have driven down utilization of U.S. steel-making capacity. That has provided a disincentive for U.S. steel makers to invest in their plants and workforce expansions. The administration has set a target of 80% capacity utilization as a goal of the tariff. Industry-wide utilization has been in the mid-70% range.

"The industry can't reinvest in its facilities It can't grow, " said Mark Millett, CEO of Steel Dynamics Inc.

Some steelmakers were heartened by the decision by South Korean officials to accepted limits on exports as part of their negotiations to avoid the blanket tariffs.

"We're hoping more of these quota deals are being negotiated," said Barry Zekelman, chief executive of Zekelman Industries Inc., a steel-pipe maker in Chicago.

"The main uncertainty for the pipe sector was the status of Korea and that's now been cleared up," added Piotr Galitzine, CEO of Houston-based steel pipe producer TMK IPSCO.

--Josh Zumbrun contributed to this article.

(END) Dow Jones Newswires

May 01, 2018 14:39 ET (18:39 GMT)

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