MW Steel stocks cheer Trump's tariffs as they combat 'unfairly priced' imports

By Tomi Kilgore

Nucor, Steel Dynamics shares lead the S&P 500's early gainers, as aluminum maker Alcoa's stock also jumps

Shares of U.S.-based steel makers surged in early Monday trading, as investors believed that President Trump's actions to place tariffs on all steel and aluminum imports would level the playing field and boost demand for the metal produced domestically.

Trump's announcement over the weekend came a few days after he helped trigger a selloff in U.S. Steel Corp. shares $(X)$, by saying he would allow Japan's Nippon Steel Corp. $(NPSCY)$ (JP:5401) to "invest heavily" in the company but not buy it.

U.S. Steel's stock rallied 6.3% in premarket trading Monday, after dropping 5.8% on Friday.

Elsewhere, shares of Nucor Corp. $(NUE)$ jumped 7.9% to pace the S&P 500 index's SPX gainers ahead of the open, while Steel Dynamics Inc.'s stock (STLD) was the index's second-best performer with a 5.8% gain. And Cleveland-Cliffs Inc. shares $(CLF)$ climbed 8.6%.

Futures for hot-rolled coil steel (HRN00) were charging up 5.6% to a 10-month high.

As Nucor Chief Executive Leon Topalian said in January during the company's earnings call with analysts, the tariffs implemented in 2018 during Trump's first administration "created some positive momentum" in the industry, by creating "a more level playing field for the United States to compete," according to an AlphaSense transcript.

Jeremy Flack, founder and chief executive of Flack Global Metals, which makes, trades and invests in steel goods, said while he would've preferred to allow Nippon Steel to buy U.S. Steel, he's a proponent of Trump's tariffs, as he believes they will protect the U.S. industry from "unfairly priced steel from other countries."

"We're in a great position to put tariffs on, because we're the largest economy in the world," Flack said in a recent interview with MarketWatch.

He said while domestic steel makers are building capacity, not enough is made in the U.S. yet to satisfy demand, so the U.S. remains a steel-importing country.

U.S. companies have a lot more capacity in the U.S., they just need "demand to come around" for domestically produced steel.

Shares of aluminum makers were also getting a nice boost, with Alcoa Corp.'s stock $(AA)$ advancing 4.4% and Kaiser Aluminum Corp. shares $(KALU)$ climbing 2.7%.

There was a caveat for Alcoa investors, however.

J.P. Morgan analyst William Peterson pointed out that only 13% of Alcoa's operating smelter capacity is in the U.S., while 40% is in Canada. And of the aluminum produced in Canada, 70% of shipped to the U.S., which would be subject to tariffs.

Alcoa Chief Executive Bill Oplinger said in January that a tariff on Canadian aluminum imports to the U.S. would actually threaten U.S. industrial competitiveness. He estimated that a 25% tariff would lead to $1.5 billion to $2 billion in additional annual costs for U.S. customers.

He said the company would have to reroute supply from its Canadian smelters, which would not benefit its customers.

"If the U.S. government decides to implement new tariffs for strategic purposes, we will work with the administration to protect Alcoa's interests," Oplinger said, according to an AlphaSense transcript.

-Tomi Kilgore

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February 10, 2025 08:05 ET (13:05 GMT)

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