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What Can U.S. Steel Investors Expect in 2017?

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Nov. 20 2020, Updated 2:25 p.m. ET

U.S. Steel investors

U.S. Steel (X) and other steelmakers like AK Steel (AKS), Nucor (NUE), and Steel Dynamics (STLD) have seen significant upwards price movements over the last couple of months. As noted previously, rising raw material costs, strengthening international prices, and the “Trump effect” have been the key drivers of US steel prices. In this article, we’ll analyze what US steel investors can expect in 2017 after a strong 2016.

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1H17

The rally in steel prices could continue in the near term given the improvement in sentiments surrounding global (MT) and US markets. There’s nothing as of now to suggest a sudden and drastic weakening of raw material prices. As steelmakers globally start adjusting steel prices upwards to reflect higher input costs, US prices could also get support. Reasonable spreads between US and international steel prices would also bode well for US steel prices.

Furthermore, strong seasonal demand in the first quarter coupled with lower supply chain inventories could help US steel pricing in the first half of 2017. US steel production, which has gained traction over the last couple of months, could continue to rise in the first half of 2017.

Steel companies could also be expected to continue their vigilance against imports in 2017. However, given current steel prices, it could become somewhat difficult for US steelmakers to prove injury. The scenario was different last year when the steel industry was bleeding under the impact of lower steel prices.

2H17

In our view, steel and raw material prices could come under pressure in the second half of 2017, especially if we see a moderation in Chinese demand. Notably, for the last two years, US steelmakers have been battling a slowdown in the second half of the year. In 2017, US steelmakers expect Trump’s proposed infrastructure investments to boost US steel demand. Having said that, Trump’s policies could be a wild card for global steel markets. You can read Why Donald Trump Could Be a Wild Card for Global Steel Markets for more detail.

You can also visit our Steel page for ongoing updates in this industry.

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