AK Steel (AKS) is having a terrible year. Based on June 29 closing prices, the stock has lost 23.3% so far. Other US-based steel producers are also having a rough time. U.S. Steel Corporation (X) and Nucor (NUE) have lost 0.97% and 0.47%, respectively. Cleveland-Cliffs (CLF), which supplies iron ore to US-based steel producers, has gained 16.9%.
AK Steel’s stock price is now down to levels last seen before Donald Trump’s election as the US president. We saw a sharp rally in many US stocks after the election. Steel stocks were especially the frontrunners in what became known as the “Trump trade.”
However, AK Steel underperformed the broader steel space in 2017, and the trend has continued this year. Last month, Goldman Sachs downgraded AK Steel and said it expects the stock to fall to $4. As the trade war escalates and concerns emerge about the sustainability of current high steel prices in the United States, steel bulls have taken a backseat. Recently, Bank of America Merrill Lynch also downgraded Commercial Metals Company (CMC).
In this series, we’ll look at the different opportunities and threats facing AK Steel. This analysis could help us understand whether the stock has bottomed out or whether more downside remains.
Let’s begin by analyzing what’s been ailing AK Steel in the next part of this series.