Market Overview

Gordon Johnson: Delay Of Sec. 232 Trumps US Steel's Unexpected Earnings Beat, Justifies Sector Weakness

Gordon Johnson: Delay Of Sec. 232 Trumps US Steel's Unexpected Earnings Beat, Justifies Sector Weakness
Related AKS
Steel Stocks Have Wall Street's Attention
38 Stocks Moving In Tuesday's Mid-Day Session
AK Steel: Perfect Storm Pushes Shares To New Lows (Seeking Alpha)
Related STLD
Insider Buys Of The Week: Macquarie, Steel Dynamics, Sotheby's
Steel Stocks Have Wall Street's Attention
Energy And Materials Dashboard - Update (Seeking Alpha)

In spite of United States Steel Corporation (NYSE: X)'s positive earnings report Tuesday, the markets saw unusual weakness across the industry Wednesday, from AK Steel Holding Corporation (NYSE: AKS) to Steel Dynamics, Inc. (NASDAQ: STLD).

Gordon Johnson, managing director of Axiom Capital Management, attributed the phenomenon to President Donald Trump’s Tuesday announcement delaying the imposition of steel import tariffs.

“The Section 232 was everything,” Johnson told Benzinga in an email, noting that all of his clients had been long steel because of it. “I don’t care what people tell you, the thought was it was going to get passed at yesterday’s Trump rally in Youngstown, OH.”

But, as he had previously warned, it didn’t pass.

“I can't believe folks were so nice on USS' call,” he added. “This is a disaster of an announcement for the steel mills by Trump.”

Considering flat-to-weak demand, high output and the fact that “auto sucks,” he expects steel prices to continue lower.

What The Steel Players Say

Johnson believed U.S. steel mills had been pumping steel prices on the prospect of the 232’s passage. Following the announced delay, he consulted multiple industry players on the implications. The overall sentiment was the market could soften following the news.

One industry source highlighted a market participant who resumed purchasing of Korean hot rolled coil recently. The source pointed out to Johnson the fact that "traders are still using 232 clauses" and that "the fear factor is gone."

Related Links:

A Long-Time US Steel Bear Is Impressed With New CEO, But Not With Stock

Can A New CEO Put The Strength Back In US Steel?

Latest Ratings for AKS

Oct 2018Seaport GlobalInitiates Coverage OnNeutral
Sep 2018Bank of AmericaUpgradesUnderperformBuy
Aug 2018Morgan StanleyUpgradesEqual-WeightOverweight

View More Analyst Ratings for AKS
View the Latest Analyst Ratings

Posted-In: Axiom Capital Management Gordon JohnsonAnalyst Color Commodities Top Stories Exclusives Markets Analyst Ratings Best of Benzinga


Related Articles (STLD + AKS)

View Comments and Join the Discussion!

Latest Ratings

MOSJP MorganDowngrades33.0
BACKeefe Bruyette & WoodsDowngrades29.0
AMTMorgan StanleyDowngrades170.0
EBAYMorgan StanleyDowngrades33.0
UNITMorgan StanleyDowngrades16.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

IRobot Rises 20%, Makes New All-Time High After Q2 Report

2 Reasons AMD Can Regain Share In The $20 Billion Server Market