The steel industry saw its fortunes change in 2016. However, it hasn’t been a smooth ride. The year started on a weak note. Steel stocks fell to multiyear low price levels as concerns surfaced about China’s economy. However, steel stocks bounced back mainly due to the trade action on imports from countries like China and Korea.
While 2Q16 went well for steelmakers (XME), we saw selling pressure in 3Q16 as the impact of trade cases started to wane. After a steep rally in the first half of the year, US flat steel prices came under severe pressure in 3Q16.
Just when market sentiments were turning negative towards the steel sector, Trump’s election turned out to be a game changer. Steelmakers including U.S. Steel Corporation (X), ArcelorMittal (MT), and Nucor (NUE) saw upward price action after Trump’s win. Several analysts upgraded steel stocks due to expectations of higher US demand.
In this series, we’ll see how analysts are rating steel companies as we head into 2017. Changes in analysts’ estimates can be key drivers of short-term price movements. Investors should keep track of changes in analysts’ estimates because they provide insights into what markets are expecting from a given company.
Let’s start by looking at analysts’ ratings and target prices for AK Steel (AKS).