In the assumption that one of the three recommendations by the DOC (Dept. of Commerce) is adopted and unlike section 201 made permanent, US producer prices (FOB Midwest mill) are unlikely to fall in the short term but the degree of gains could be quite different.
In this article we examine "option 3" - a quota regime, which restricts foreign steel to 63% of the 2017 total. In this scenario the price ceiling on that particular tonnage of roughly 13M metric tons (incl. 10m tons of finished steel) would be determined only by "demand destruction". In other words, the US user reaches a price it cannot afford, is unable to acquire replacement steel, and withdraws from the market, destroying the demand for that steel. Recognizing the level at which this occurs is challenging. MBR's Tube & Pipe group recently detailed that a quota on OCTG line pipe would add 20-30% to the price in the US and destroy up to 5% of drilling demand.But what about the larger volume, less valuable steels upstream? We can estimate a "ceiling" by looking at the spot pricing archives of AMM and...