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U.S. Steel, ArcelorMittal stocks struggling amid depressed prices

U.S. Steel's Edgar Thomason Plant in western Pennsylvania. The steelmaker's stock has been depressed amid sagging steel prices.

The stock prices of two of Northwest Indiana's largest employers have been depressed amid sagging steel prices.

U.S. Steel's stock traded between $13.61 a share and $13.95 a share late Wednesday afternoon, down from a yearly high of $24.10 a share on Feb. 21. ArcelorMittal's stock traded between $16.45 and $16.75 Wednesday, down from a 2019 high of $23.86 a share on April 17.

Steel stocks have slumped despite the tariffs of 25% on most foreign-made steel because customers stockpiled cheaper steel before the tariffs took effect, which caused a temporary run-up in steel prices. Domestic production has risen 6% this year to 43.1 million tons as of last week, while imports have fallen 8.6% to 14 million tons, according to the American Iron and Steel Institute.

With a glut of steel still in the marketplace, hot-rolled coil prices have been declining since last summer and have fallen by 21% so far this year. Steel sector stocks generally dropped by 7% as a result in the spring, according to Seeking Alpha.

Goldman Sachs downgraded U.S. Steel stock to sell earlier this month.

"Weakening demand crossed with stubbornly high output from domestic mills has dragged steel sheet prices down to their lowest levels since 2016, and recent moves by the Trump administration to weaken the Section 232 tariffs have contributed to expectations of ample available supply in the U.S. market," Goldman Sachs analyst Matthew Korn wrote in the note.

Matthew Miller of CFRA Research recently downgraded his view on U.S. Steel shares from "strong buy" to "buy," decreasing the 12-month target price to $11, down from $20.

"Given the global supply issues facing iron ore, we think U.S. Steel's input costs are likely going to stay higher for longer and combined with the persistent declines in steel prices in the U.S., these factors drive our lower earnings estimates," Miller wrote in a note. "While we continue to think U.S. Steel is an undervalued stock, the decision by the U.S. government to exempt Canada and Mexico from the Section 232 tariffs is a concern, given the renewed possibility that imports from other nations could be trans-shipped tariff-free via Canada or Mexico."

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.