American Steel: Trump Could Kill the Trump Shipping Boom

The primary Wholesale Direct Metals complaint about recent market reporting is apparent in today’s news.  It is true that Trump wants to build a wall on the Mexican border and improve our roads, bridges and airports. Trump has also promised to revive the American steel industry. There are formidable American steel companies such as United States Steel Corp AK Steel Holding Corporation, Nucor Corporation, TimkenSteel Corporation, and Steel Dynamics prepared to supply steel and related components. China has the most steel overcapacity in the world. However, Trump has talked about putting up to a 45% tariffs on Chinese imports. Can anyone in his or her right mind see Trump importing steel from China to build American infrastructure? It is true that all the infrastructure projects will consume a large amount of gravel and related construction materials. However, plenty of gravel already exists in America. American companies such as Martin Marietta Materials, Vulcan Materials and Summit Materials are fully capable of meeting the needs.

Can anyone in his or her right mind see loading gravel from China on Chinese ships to export to America? Many gurus have pronounced a short squeeze as the main reason behind these huge moves. It is true that these stocks have become hard to short now, but that is not the same as a short squeeze. Gurus claiming there is a short squeeze simply are not long-time traders with lots of experience. I have not only seen, but have profited handsomely from many short squeezes in my 30-plus years in the markets. In my opinion, a short squeeze is not the real reason behind these big moves. Take a look at the social media. From here, I think the real reason behind these moves is daytraders run amok. Since many of these stocks have very low floats as shown in the table referenced above, moves have become highly exaggerated.  The latest Wholesale Direct Metals reviewof the markets is consistent with this new data.