Have US Steel Stocks Front-Loaded Their 2018 Gains?



2018 gains

Steel stocks are having a strong month. Based on January 12 closing prices, U.S. Steel Corporation (X) and AK Steel (AKS) have respectively gained 11.2% and 9.3% this month. Nucor (NUE) and Steel Dynamics (STLD) have also seen upward price action of 8.5% and 9.0% so far this month, respectively.

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US steel stocks

January’s upwards momentum was preceded by a strong December as well. Steel stocks had a smart rally last month that helped companies like U.S. Steel and Nucor close 2017 with yearly gains. However, AK Steel couldn’t not recoup its 2017 losses despite sharp gains in December.

Last month, we noted that the 2018 outlook for steel companies like U.S. Steel and AK Steel looked fairly bullish as we head into 2018. However, we’ve seen sharp gains in steel stocks right at the beginning of the year, which is similar to 2017, when steel stocks were strong at the beginning of the year but then lost momentum. Several US steel producers (XME) were trading with yearly losses for most of 2017.

Series overview

Now, the key question could be: have US steel stocks front-loaded their 2018 gains, and could the year be similar to 2017, when US steel prices showed weakness as the year progressed? In this series, we’ll look at the outlook for US steel prices that could help us understand how steel stocks could play out in 2018.

Before we look at the outlook for US steel prices, let’s analyze the recent developments in the Section 232 imports probe initiated by the Trump administration last year.


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