Shareholders of the biggest U.S. steelmakers could hardly have asked for a better first half of 2016.
And with improved balance sheets to address hefty debt loads, some manufacturers are now well positioned for future growth, analysts with Deutche Bank said in a Wednesday report.
Coming off a year in which cheap steel imports added to the pressures of disappearing oil and gas customers, shares of U.S. Steel (X) and industry-peer AK Steel (AKS) have more than doubled year to date. And the rising price of cold-rolled steel imports has been the tide lifting all boats, climbing 57% from January troughs to $660 a short ton as of Wednesday trading. U.S. Steel is part of the Real Money's Stressed Out watch list.
The recovery has recently been accelerated by the Department of Commerce's March decision to begin imposing a 266% tariff on Chinese steel imports, as that country is largely viewed in the industry as having reached a glut in steel reserves.
Meanwhile, shares of TimkenSteel (TMST), a fellow member of Real Money's Stressed Out watch list, are up 15% on the year.
The Deutsche Bank analysts -- in a Wednesday report upgrading both U.S. Steel and the country's largest steelmaker Nucor (NUE) to Hold from Sell -- say the price rebound may have reached its peak, but U.S. Steel and Nucor's balance sheets are now in much healthier shape to deal with their respective $3.2 billion and $4.4 billion debt loads.
"We remain of the view that material supply cuts are still needed in most commodities and therefore do not anticipate prices continuing the upward trend," they added.
Nucor shares climbed 4% in afternoon trading Wednesday, followed by more than 1% gains in U.S. Steel, AK Steel, and TimkenSteel.
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