Steel stocks

On March 8, 2018, President Trump announced tariffs on US steel imports under Section 232 of the Trade Expansion Act of 1962. The tariffs became effective on March 23. There have been some changes in the tariffs over the last year. Some countries have managed to get long-term exemptions from the tariffs. However, the temporary exemptions for the European Union, Canada, and Mexico were eventually withdrawn. Mexico and Canada might get an exemption with a quota.

How Analysts View Steel Stocks a Year after Trump’s Tariffs

Bears’ view

When the tariffs were imposed, there were two schools of thought. The bears expected the impact of the tariffs to wane. The bears said that the tariffs would actually hurt US steel demand because downstream product imports would increase. The bears also saw capacity restarts in the United States as a bearish driver for US steel prices (SPY). U.S. Steel (X) has restarted two blast furnaces. Nucor (NUE) and Steel Dynamics (STLD) have also announced massive investment plans. However, AK Steel (AKS) has announced the permanent closure of its Ashland Works facility, which was curtailed in 2015.

Analysts’ rating

Some analysts expected the tariffs to revive US steel companies and boost to their stock prices. Looking at the price action, the bears seem to have won the argument. However, steel companies like Nucor and Steel Dynamics actually posted record earnings last year.

The tariffs have been in place for almost a year. We’ll discuss how analysts see leading steel companies. Next, we’ll discuss Steel Dynamics’ ratings and target prices.

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