Steel bundles from the Nucor Corporation sit for sale on August 30, 2012 in Thompson Building Materials in Lomita, California.
Patrick Fallon | Bloomberg | Getty pictures
US steel manufacturers should be the beneficiaries of President Donald Trump's new tariffs, but Wall Street warned that there are some risks in the long term.
On Saturday, Trump hit 25% tariffs on imports from Mexico and Canada and a delivery of 10% to those from China. On Monday, the United States entered Mexico for a month for a month to send President Claudia Sheinbaum to send troops to the northern border.
These decisions returned the early film of the stock market. The Dow Jones Industrial Average It was recently about 100 points after the start of the trading day by about 100 points after 600 points lower.
The steel stocks waffled after they made some profits in the Premarket. Nucor The shares rose by about 2% and US steel moved by 1% higher in the morning trade Steel dynamics was lower.
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Nucor shares last year.
It is expected that the taxes in the United States will make foreign steel more expensive. Companies hope that US production will increase as a result and give them the opportunity to increase prices.
The industry has been fighting cheap foreign imports for years, thanks to the illegal replacement in the US market, said Leon Topalian Leon, CEO of Nucor, in an interview with CNBCS “Mad Money” last Tuesday. Dumping refers to it when a foreign country starts at a cheaper price than on the house market or below the production costs.
“It is illegal dumping, the subsidization of steels and currency manipulation that creates a very unbalanced and uneven field that has been injured the steel industry for decades,” Topalian told Jim Cramer.
Canada is the top stahlexporter in the USA, while Mexico is the third largest, according to Census Bureau. The countries were initially targeted in the tariffs of the first Trump government, but finally reached a trade agreement that included a liberation.
Morgan Stanley sees a direct impact on pricing for US steel companies.
“We believe that the prices will recover after a challenging 2024, which is supported by protectionist trade measures,” said Analyst Carlos de Alba in a note on Monday. “We project prices to further improve in 2026 if the effects on the US economy flow through the tariff effects.”
However, these price increases are alleviated by limited damped demand. Wall Street Investment Bank expects “modest” growth of steel requirements of 1.6%.
In addition, de Alba Us -Stahl rated down and said that he no longer sees a meaningful advantage of his price target, provided Us Steel remains independent and is not acquired. His goal of 39 US dollars per share implies 6% compared to the end on Friday.
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US steel
The planned takeover of US steel by Japan's Nippon Steel was blocked in January by the Biden Administration. NUCOR is now working with a partnership Cleveland cliffs In a potential offer for US steel, sources recently announced David Faber from CNBC.
In the meantime, UBS also sees higher steel prices when the tariffs are imposed and kept.
“The trade disorder should increase the prices at short notice and support US steel shares, but a low demand and capacity extensions will compensate for these profits in the most important products in our view in the medium term,” wrote analyst Andrew Jones in a note on Monday.
Bank of America Securities also emphasized future headwinds, although the steel manufacturers will benefit from more expensive imports.
“In the long term, we see the downward risk for the US steel stocks from the potential for significantly reduced car production, around 25% of US steel demand,” said Analyst Lawson Winder in a note on Monday.
Correction: Carlos de Alba is analyst at Morgan Stanley. An earlier version wrote his name wrote.