Tariffs Drive Steel Stock Gains As Analyst Highlights Catalysts For Nucor, US Steel

Core Insights - JPMorgan analyst Bill Peterson identifies significant implications for steel stocks beyond political tariff discussions, highlighting potential benefits from higher pricing and changing trade flows [1] Group 1: Key Players and Ratings - Nucor Corp (NUE) is rated Overweight, benefiting from product diversification and prioritizing profitability over volume, which may lead to multiple expansions for the company and the sector [2] - U.S. Steel Corp (X) also holds an Overweight rating, with strong valuation support and potential for share buybacks due to easing capex requirements and expected free cash flow inflection in 2025 [3] - Steel Dynamics Inc (STLD) receives a Neutral rating, with long-term value potential from its aluminum rolling mill project, but faces near-term risks from pricing pressures [4] Group 2: Market Dynamics and Pricing - Recent Section 232 tariffs have led to a rally in steel stocks, with increases of 5% to 17% in anticipation of higher pricing, and the HRC forward curve rising approximately 10% since pre-election levels [5] - Industry participants expect steel prices to range between $850 and$900 per ton, with potential peaks near $1,000 per ton, benefiting stocks with high spot exposure like U.S. Steel and Cleveland-Cliffs Inc (CLF) [5] Group 3: Future Outlook - The near-term outlook for steel stocks is positive, driven by higher prices, favorable demand-supply dynamics, and strategic positioning [6] - However, the long-term outlook remains uncertain due to potential shifts in exemptions and demand-side risks [6]