Al Root

Nucor and other steel stocks rose in Monday trading, helped by a Wall Street broker's more "constructive view" of the sector.

UBS analyst Andrew Jones said in a Monday report that American steel stocks that he follows are down more than 15% from mid-December levels despite President Donald Trump's trade protections. His administration recently implemented 25% tariffs on steel and aluminum imports.

Benchmark steel prices shot up from roughly $750 a ton to $900 a ton after tariffs were announced.

There is some concern that tariffs could slow the economy and, in turn, reduce steel demand. But that doesn't faze Jones: "We are confident that prices will hold in the $800s [per ton], supported by a much higher cost curve (on scrap) and higher import parities (on tariffs), even in a bleak demand scenario." Prices north of $800 should lead to higher earnings for steel producers.

Higher steel prices and a selloff in the sector's stocks are why Jones feels more "constructive" or, simply put, optimistic about the outlook for steel companies. He upgraded shares of Nucor and Steel Dynamics to Buy from Hold. Jones' Nucor price target went to $160 from $156 a share. His Steel Dynamics price target stayed at $149 a share.

Nucor stock was up 5.3% in at $128.52 a share. Steel Dynamics stock was up 3.6% at $127.06, while the S&P 500 and Dow Jones Industrial Average were up 1.5% and 1.2%, respectively.

Other steel stocks were up despite no ratings change. U.S. Steel stock added 2.4% to $41.86 a share. Cleveland-Cliffs shares were up 3.1% at $9.72 apiece. Jones doesn't cover Cliffs or U.S. Steel shares.

Overall, 50% of analysts covering Cliffs stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Cliffs stock is about $12 a share.

For U.S. Steel, 55% of analysts covering the company rate shares Buy, and the average price target is about $42 a share.

The Buy-rating ratios for Nucor and Steel Dynamics are 69% and 50%, respectively. The average target price for Nucor shares is about $155. The average for Steel Dynamics stock is about $147.

Write to Al Root at allen.root@dowjones.com

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(END) Dow Jones Newswires

March 24, 2025 12:26 ET (16:26 GMT)

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