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Tags: credit | suisse | downgrades | steel

Credit Suisse Downgrades US Steel Sector, Citing Oversupply

hand painted in the american flag clenched in a fist smashing the word steel

Florin Seitan| Dreamstime.com

Monday, 15 October 2018 10:15 AM EDT

Credit Suisse on Monday downgraded the U.S. steel sector as it expects prices to fall due to oversupply, stemming from the Trump administration’s move to slap tariffs on Chinese imports.

U.S. steel prices and production have hit multi-year highs due to the tariffs as well as strong demand from an expanding economy.

The brokerage cut its rating on the sector to “market weight” from “overweight,” saying capital spending by firms has “disappointed” investors. Credit Suisse also downgraded Nucor Corp., Steel Dynamics and Cleveland Cliffs to “neutral.”

The Trump administration’s ongoing talks with Canada on tariffs related to steel and aluminum could also add to the oversupply of the commodity, the brokerage said.

A near-term deal with Canada remains unlikely, but odds are in favor of a deal being sorted out by early 2019, Credit Suisse said.

“We believe it’s likely that Canada and the U.S. will come to some agreement on quotas and tariffs will go away,” Credit Suisse analysts wrote in a note on Monday.

Last week, Canada said it would impose new quotas and tariffs on imports of seven categories of steel to head off a potential rise in imports as overseas steelmakers shut out of the United States seek new customers.

© 2024 Thomson/Reuters. All rights reserved.


InvestingAnalysis
Credit Suisse on Monday downgraded the U.S. steel sector as it expects prices to fall due to oversupply, stemming from the Trump administration’s move to slap tariffs on Chinese imports.
credit, suisse, downgrades, steel
204
2018-15-15
Monday, 15 October 2018 10:15 AM
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