Market Overview

Morgan Stanley Upgrades US Steel, Sees Near-Term Bounce In Steel Prices

Morgan Stanley Upgrades US Steel, Sees Near-Term Bounce In Steel Prices

Steel stocks have taken a beating in the past year, but one Wall Street analyst said Monday a seasonal ramp in U.S. steel demand should help boost prices in the near-term.

The Analyst

Morgan Stanley analyst Piyush Sood made the following changes to his steel coverage:

  • AK Steel Holding Corporation (NYSE: AKS) downgraded from Overweight to Equal-Weight, price target cut from $5 to $3.
  • United States Steel Corporation (NYSE: X) upgraded from Underweight to Equal-Weight, price target cut from $30 to $21.
  • Cleveland-Cliffs Inc (NYSE: CLF) reiterated at Equal-Weight, price target cut from $10.50 to $10.
  • Commercial Metals Company (NYSE: CMC) reiterated at Equal-Weight, price target cut from $26 to $21.
  • Nucor Corporation (NYSE: NUE) reiterated at Equal-Weight, price target cut from $73 to $62.
  • Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) reiterated at Underweight, price target cut from $26 to $22.
  • Steel Dynamics, Inc. (NASDAQ: STLD) reiterated at Overweight, price target cut from $52 to $42.

The Thesis

Market dynamics should stabilize steel prices and most steel stocks in the first half of 2019, Sood said. However, he wouldn’t be surprised to see downward pressure on steel prices resume in the second half of the year.

“As tariffs are eased further in 2019 and supply/imports increase, steel prices will once again come under pressure, beginning in 2H19,” Sood wrote in a note.

He said buyers have mostly stayed on the sidelines in recent in anticipation of lower prices down the road. That dynamic drove hot rolled coil steel prices down from a peak of $920/t in summer 2018 to recent levels of between $640/t and $690/t. Morgan Stanley forecasts late Q1 and Q2 HRC prices of around $700/t driven in part by China stimulus demand.

In the longer term, the firm is forecasting 2020 and 2021 HRC prices of $660/t and $640/t, respectively.

Price Action

Here’s how the steel stocks mentioned reacted to the new commentary Monday:

  • U.S. Steel was down 0.1 percent.
  • Steel Dynamics was down 0.4 percent.
  • Schnitzer Steel was down 2.4 percent.
  • Nucor was down 1.2 percent.
  • Commercial Metals was down 1.1 percent.
  • Cleveland Cliffs was down 1.9 percent.
  • A.K. Steel was down 6.4 percent. The company reports fourth-quarter earnings Monday afternoon.

Related Links:

Steel Stocks Have Wall Street's Attention

Seaport Global Says The Steel Industry Is Due For A Bounce

Latest Ratings for X

Sep 2019DowngradesOverweightNeutral
Sep 2019MaintainsUnderperform
Sep 2019DowngradesOutperformUnderperform

View More Analyst Ratings for X
View the Latest Analyst Ratings

Posted-In: Analyst Color Upgrades Downgrades Price Target Commodities Reiteration Top Stories Markets Best of Benzinga


Related Articles (AKS + CLF)

View Comments and Join the Discussion!

Latest Ratings

YEXTMorgan StanleyMaintains15.0
WKMorgan StanleyMaintains42.0
RAMPMorgan StanleyMaintains58.0
PDMorgan StanleyMaintains34.0
HTHTDaiwa CapitalDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
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.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Report: US Cannabis Consumer Shopping Keeps Climbing

Deal To Reopen Govt. Boosts Wall Street As Trade, Fed News Also Help