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Why Cliffs and the US Steel Sector Rejoiced after Trump’s Win

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Nov. 10 2016, Published 5:24 p.m. ET

US steel sector rejoices

Cliffs Natural Resources (CLF) rallied 17% on November 9, 2016, after the election results came in. However, the company not alone in enjoying the party as US Steel (X), AK Steel (AKS), and Nucor (NUE) also joined in with one-day gains of 17%, 14%, and 12%, respectively. The US steel industry staged a huge outperformance as compared to the gains of 1.1% for the S&P 500 Index (SPY).

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Drivers behind market optimism

Prior to elections, Trump had campaigned heavily in the steelmaking states, vowing to protect the sector from illegal and subsidized imports. The steel industry in the US is the obvious winner following Donald Trump’s win. He is known for his stand on protectionism. That along with his promises to focus on infrastructure led the industrial metals to rally in the aftermath of elections. Both protectionist measures and increased infrastructure spending should support US steelmakers. Cheaper imports from other countries around the world wreaked havoc in the US steel industry last year. The government has imposed anti-dumping duties on many of these countries, which led the steel prices in the US to rally in the first half of 2016.

Series overview

In this series, we’ll analyze how the US steel sector could play out under Donald Trump’s presidency. We’ll also look at other factors that could play out during Trump’s presidency that could impact Cliffs.

Let’s begin by analyzing the impact Trump’s presidency could have on Cliffs Natural Resources’ realized prices.

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