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US Steel Stocks Struggling despite Decent Fundamentals

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US steel stocks

US steel stocks are having a tough year despite trade protection from the Section 232 tariffs. Based on the closing prices on August 24, U.S. Steel Corporation (X) and AK Steel (AKS) have lost 11.7% and 24.2%, respectively, in 2018. Nucor (NUE) is trading roughly flat this year. However, Cleveland-Cliffs (CLF) has seen an upward price action of 37.0% year-to-date.

While the Section 232 tariffs have catapulted US steel prices to multiyear highs, the steel industry has been out of favor with investors. Uncertainty about the Section 232 tariffs and the expected slowdown in China’s economy amid the US-China trade war took a toll on steel stocks. US aluminum producers including Alcoa (AA) are also deep in the red for the year. In aluminum’s case, while the Section 232 tariffs have lifted US physical delivery premiums, aluminum prices have come under pressure and track the weakness in broader base metals.

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Series overview

In this series, we’ll discuss some of the recent steel industry indicators. Since US steel markets are also impacted by global developments, we’ll look at some of the global economic indicators. We’ll also take stock of the US steel industry’s demand-supply equation.

The Trump Administration intends to curtail US steel imports with the Section 232 tariffs. Next, we’ll discuss steel import data in July.

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