Zitong Financial APP learned that the Biden government issued guidance to some federal agencies on Monday local time, requiring the purchase of raw materials for projects funded by the infrastructure spending plan approved at the end of 2021 to be produced in the United States. At the same time, it issued the relevant mechanism to abandon the above necessary conditions in the case of insufficient number of domestic producers or high cost of raw materials in the United States.
The opinion requires that all raw materials used for infrastructure construction, whether for bridges, highways, water pipes or broadband Internet construction, must purchase raw materials such as steel produced in the United States. However, there are exceptions to this rule, if there are these factors: the required materials do not have a "sufficient and reasonable available quantity or satisfactory quality", or if American materials increase project costs by more than 25%, then raw materials that are not made in the United States can be purchased.
Regulators must ensure that all steel products purchased by the project, from the initial melting process to the final paint application, must be fully produced in the United States, the guidance said.
Us stocks related to this guidance include:$American Steel (X.US) $、Cliff Natural Resources (CLF.US) $、$Nucor Steel (NUE.US) $, Commercial Metals (CMC.US) and Steel Dynamics (STLD.US) and other related steel and other raw materials manufacturers. With the exception of Cliff Natural Resources and Commercial Metals, the other three stocks rose on Monday.
Since the beginning of this year, as the escalation of the conflict between Russia and Ukraine has led to an intensification of supply shortages and a general rise in raw material prices, the five stocks of the above-mentioned US steel companies have performed very brightly so far this year, of which US Steel has risen 56 per cent so far this year. Cliff natural resources are up nearly 45%, but they have been in a trend of horizontal volatility since April.
Cliff Natural Resources is increasing its share of fixed contracts with large suppliers, Valkyrie Trading Society wrote in a recent bullish analysis on the Seeking Alpha information platform.
It is understood that although the US federal government has invested about 350 billion US dollars in construction projects this year, it is still not clear how much of the building materials in existing infrastructure projects are entirely made in the United States. The new guidance will also allow government officials to know how much money is going to American workers and manufacturing plants.