By Dean Seal

Shares of U.S. steel companies advanced after UBS analysts said a recent selloff in the sector is out of step with potential tailwinds from tariffs on steel imports.

The analysts upgraded Nucor and Steel Dynamics to buy on Monday, and said in a research note that top steel producers have seen their shares drop from December highs despite new steel protections that have driven a material shortage and hiked prices.

While prices are expected to pull back in the coming years from increases in capacity, higher utilization rates for U.S. steel and redirected trade flows, they should hold at solid levels due to higher costs on scrap and higher import parities from tariffs, the analysts said.

Nucor's stock was up 5.6% at $128.80 in early trading, and shares of Steel Dynamics rose 3.6% to $127.04.

Other big names in the sector got a boost as well. Shares of Commercial Metals, which UBS opted to maintain at a neutral rating, advanced 5.3% to 49.06. Reliance's stock gained 3.2% to $286.47, U.S. Steel's stock rose 2.7% to $42 and shares of Cleveland-Cliffs ticked up 1.8% to $9.59.

The analysts expect the industry to face less demand destruction this year than the market seems to fear, and for U.S. shipments to benefit from a pullback in imports.

The steelmaker selloff from the recent trade war is presenting an attractive opportunity to buy Nucor and Steel Dynamics, the analysts said.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

March 24, 2025 11:35 ET (15:35 GMT)

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