With many nations, including the European Union and Canada, negatively responding to President Trump’s proposed 25% tariff on imported steel and 10% tariff on imported aluminum designed to protect domestic production on behalf of American national security the $13.50 billion of short exposure to the aluminum and steel sectors have suddenly become more volatile positions.
The $13.50 billion of Steel and Aluminum manufacturing sector short interest is diversified around the world, with the largest concentration in Brazil and the United States.
Depending on the implementation of the proposed U.S. tariffs and the worldwide response we should see short interest shifting on a regional basis once a clearer picture develops. Initial thoughts would assume a shift of short interest offshore with demand for U.S. companies’ steel and aluminum production increasing due to cheaper pricing. In the meantime, most of the companies in the worldwide Steel & Aluminum Sectors are trending downwards and short sellers are enjoying the volatility and short term boost to their bottom lines.
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Managing Director Predictive Analytics, S3 Partners, LLC
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