Key Takeaways
UBS analysts on Monday upgraded the shares of several U.S. steelmakers, citing Trump's "tariff support."
Steelmakers Nucor ( NUE ) and Steel Dynamics ( STLD ) were recently up 4% and 3%, respectively after UBS analysts on Monday upgraded both stocks to "Buy."
Steel prices have soared since President Trump signed an order in early February imposing a 25% tariff on all steel and aluminum imports. Nucor has reportedly raised prices eight times since the start of the year. The company now charges $930/short ton for hot-rolled coil, up more than 17% since Trump’s tariff order.
UBS expects prices to come down eventually as new capacity comes online. “However, we are confident that prices will hold in the 800's, supported by a much higher cost curve (on scrap) and higher import parities (on tariffs), even in a bleak demand scenario,” the analysts wrote.
Some economists and analysts have warned that Trump’s tariff policies, intended to boost domestic manufacturing, could undermine that goal by lifting prices and reducing domestic demand. UBS analysts, however, see reason for optimism. Demand has been weak so far this year, but they “expect 2H25 demand to benefit from stabilization/recovery in traditional markets & federal stimulus,” including the 2021 Infrastructure Investment and Jobs Act. (Though the Trump administration is currently fighting to freeze all IIJA and Inflation Reduction Act funds.)
Despite the support of President Trump, steel stocks have failed to keep pace with soaring prices. Even with Monday’s gains, Nucor shares are down about 18% since early December, while Steel Dynamics has lost about 13%. The stocks have been hit in the last month by the same economic concerns that have weighed on the broader equities market.
“We believe the trade war sell off/de-rating could provide an attractive opportunity for NUE/STLD,” wrote the analysts. UBS on Monday maintained its $149 price target on shares of Steel Dynamics, implying 21% upside from Friday's close. They lifted Nucor's price target by $4 to $160, which represents upside potential of 31%.
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