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These Factors Could Drive Cleveland-Cliffs in 4Q17 and Beyond

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Oct. 9 2017, Updated 6:43 a.m. ET

US steel sector

The US steel sector (SLX) is having a tough year, despite support from the Trump administration. While steelmakers were euphoric after Trump was elected president, with hopes of increased protectionism and higher infrastructure spending, that enthusiasm is now waning. Imports have been inching higher after falling significantly in 2016.

US steelmakers were also optimistic regarding the Section 232 probe into US steel imports. While the decision was expected to come by the end of June, it has been deferred.

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Price performance

US steel stocks are affected by the performance of the US steel sector. As of September 29, 2017, AK Steel (AKS) was trading at the highest YTD (year-to-date) loss of 45.2%. Cleveland-Cliffs (CLF), U.S. Steel Corporation (X), Nucor (NUE), and Steel Dynamics (STLD) have also seen negative returns, of 15.0%, 22.3%, 5.8%, and 3.1%, respectively. Only ArcelorMittal (MT) has seen positive YTD price action, rising 17.6%.

Series overview

Nucor and Steel Dynamics have provided their 3Q17 guidance, which was lower than expected. Investors may be wondering if their lower guidance could be because of the US steel sector’s weakness. In this series, we’ll look at factors affecting US steel stocks, such as imports, prices, production, and demand. We’ll also see how developments in China could affect the US steel industry’s 4Q17 outlook.

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