Steel prices are expected to improve this year, supported by the Trump administration's pledge to impose tariffs on steel imports along with modest steel demand growth, Morgan Stanley said in a note to clients Monday.
The higher prices will be a result of expected tariffs that will "help further reduce steel imports" and lead to "an improvement of lead times that are currently near historical lows," the investment firm said.
"Bottom-up demand indicates steel consumption will grow 1.6% in 2025, driven by expected gains in the construction space, but partially offset [by] continued weakness in the auto market," the investment firm said in the note.
Additionally, prices will likely "improve further in 2026 as tariff implications flow through the US economy," according to the note.
Morgan Stanley downgraded US Steel's (X) rating to equal-weight, saying the company's shares are now trading near the firm's standalone valuation of $39 per share.
Morgan Stanley also cut Commercial Metals' (CMC) price target to $56 from $65, Cleveland-Cliffs' (CLF) price target to $11 from $13, and Nucor's (NUE) price target to $154 from $166, while increasing Steel Dynamics' (STLD) price target to $145 from $131.
Price: 37.43, Change: +0.58, Percent Change: +1.57
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