Shares of domestic steel makers U.S. Steel (X), Nucor (NUE) and Steel Dynamics (STLD) rallied Wednesday in bullish fashion after Donald Trump's Commerce Secretary nominee Wilbur Ross signaled the incoming administration will levy more tariffs and anti-dumping duties on imported Chinese steel.
Billionaire investor Ross said at Wednesday's Senate confirmation hearings that Chinese overcapacity is the biggest problem for the steel industry, with Chinese steel makers selling their wares overseas "often at dumping prices."
"One of the things that we do need very careful attention to is more tariff activity, the anti-dumping requirements that we should impose on the steel industry and on the aluminum industry as well," he said.
Ross added: "China is the most protectionist country of very large countries. They have both very high tariff barriers and very high non-tariff trade barriers. So they talk much more about free trade than they actually practice."
The Obama administration has several times used anti-dumping duties vs. Chinese goods, including cold-rolled steel products. Last week, the administration filed a complaint with the WTO over Chinese aluminum production.
President-elect Trump has long signaled his support for more protectionist policies, while campaigning on plans for a big infrastructure spending.
Ross said Wednesday that the U.S. has "monumental" infrastructure needs.
U.S. Steel, Steel Dynamics and Nucor all rallied on Ross' comments, rebounding from at or just below their 50-day moving averages, triggering buy points for all three stocks. U.S. Steel soared 8.5% on the stock market today, while Steel Dynamics jumped 4.7% and Nucor climbed 3.8%.
Steel stocks soared for a month after the election on hopes for more protectionism and infrastructure spending under Trump. But they pulled back and consolidated starting in early December after both Nucor and Steel Dynamics warned on Q4 profit.
IBD'S TAKE: Major steel makers all in buy ranges Wednesday as U.S. Steel, Nucor and Steel Dynamics all are bouncing off their 50-day moving averages. Steel Dynamics is leading the charge in the industry group with an IBD Composite Rating of 92 and a Relative Strength rating of 95.
Separately, diversified mining giants BHP Billiton (BHP), Rio Tinto (RIO) and especially Vale (VALE) rallied intraday. BHP rose 0.8% and Rio about 2%, both climbing to their best levels since mid-2015. Vale shot up 4.5% to its best levels since late 2014 on reports it'll move to improve shareholder governance and perhaps merge the miner's common and preferred stock.
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