US steel and iron ore stocks were in the red today in the early trading hours. As of 10:30 AM ET, U.S. Steel (X), AK Steel (AKS), Nucor (NUE), and Cleveland-Cliffs (CLF) were down 1.6%, 0.43%, 1.1%, and 0.5%, respectively. Steel stocks are nearing 52-week lows. Plus, they’re trading far below the price levels we saw when President Trump announced the Section 232 tariffs.
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Meanwhile, Trump has credited his tariffs for reviving the steel industry. Yesterday, Trump tweeted, “In one year Tariffs have rebuilt our Steel Industry – it is booming! We placed a 25% Tariff on “dumped” steel from China & other countries, and we now have a big and growing industry.”
To be sure, we’ve seen a flurry of investments from US steel companies. While Nucor and Steel Dynamics are investing in expanding their nameplate capacity, U.S. Steel is working on revamping its existing plants. U.S. Steel has also announced the restart of two blast furnaces and began the construction of its Fairfield electric arc furnace project.
While President Trump likes steel companies’ investment plans, markets have a different view. Analysts expect rising US steel production capacity to drive US steel prices down over the coming years. US steel prices have already fallen below the pre-tariff levels in some cases. As for U.S. Steel, its massive capex projects are concerning markets, as they could lead to a cash burn over the next couple of years.
While US steel companies’ earnings rose sharply last year, and Nucor and Steel Dynamics posted record earnings, all steel companies are expected to report lower earnings this year amid the fall in steel prices. However, despite record earnings, steel stocks closed in the red last year. Also this year, steel stocks are underperforming broader markets.