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What Could Lift U.S. Steel Corporation Stock from Its Slump?


Dec. 4 2020, Updated 10:51 a.m. ET

U.S. Steel stock

Previously, we looked at the bearish argument for U.S. Steel Corporation (X). However, market observers who are bullish on the steel industry point to the stable demand environment and low supply chain inventories as the steel industry’s bullish drivers. Although global steel prices have weakened this year, steel bulls expect the Trump Administration’s probe into steel imports to provide some sort of relief for US steel plays including AK Steel (AKS) and Nucor (NUE).

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Trade actions

To be sure, trade actions have worked wonders for the US steel industry in the past. However, the impact of trade actions has been temporary—we started to see imports coming in from new locations. We have last year’s example of flat-rolled steel. We started to see imports from Vietnam after duties were imposed on some of the other countries including China, Japan, and South Korea.

Final word

Steel bulls expect a wider range of duties from the Trump Administration. However, if investigations from the Section 232 probe aren’t broad-based and fail to reasonably protect US steel companies from steel imports, steel bulls could be in for a disappointment.

The Section 232 probe could significantly alter the US steel industry’s (MT) (XME) competitive landscape. However, we would have to look at the final investigation to see how the Trump Administration plans to address the US steel industry’s long-standing demand of a “level playing field” with foreign steelmakers.

We might get the final findings before the end of this month. To stay updated on the latest developments, visit Market Realist’s Steel page.


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