Just when it looked as though U.S. steelmakers had repelled a tide of cheap imports, more attractive prices risk inviting another wave of shipments. The most iconic U.S. producer is bearing the brunt of concern.
U.S. Steel Corp. shares fell as much as 10% in New York Thursday, the biggest loss among large iron and steel stocks tracked by Bloomberg. That’s as surging U.S. steel prices and falling Chinese prices boost the appeal of targeting the U.S. market even after import tariffs were introduced in recent months for some products. AK Steel Holding Corp., another domestic producer, fell 4.6%. Nucor Corp. was little changed.
“A boatload of imports are likely on the way,” Gordon Johnson, an analyst at Axiom Capital Research said in a research note Thursday, reiterating a sell rating for U.S. Steel on prospects of losses before items for the remainder of the year.
The Pittsburgh-based producer founded by Andrew Carnegie in 1901 is retreating from its best year in more than a decade after prices for raw materials such as iron ore fell, spooking investors who expect steel prices to follow, David Gagliano, an analyst at BMO Capital Markets, said by telephone.
“A lot of hedge funds will buy a company like U.S. Steel based on whether they expect steel prices to rise or not,” Gagliano said. “People are starting to re-think this view that prices in the U.S. are going to stay elevated when raw material costs are coming down.”
A spokeswoman for U.S. Steel declined to comment.