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Stock Strategist Industry Reports

More Pain Ahead for U.S. Steelmakers

Even after their shares have traded down, we see little upside.

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Although the shares of U.S. steelmakers have traded sharply lower in recent months, we see little upside and urge bargain hunters to seek greener pastures. In 2015, the group faced a perfect storm that included massive global overcapacity, weak demand, high import levels, low capacity utilization, and a deflationary price environment. For the most part, these headwinds remain and are likely to persist.

We maintain a cautious long-term outlook for the U.S. steelmakers we cover, a list that includes  AK Steel (AKS),  Commercial Metals (CMC),  Nucor (NUE),  Steel Dynamics (STLD), and  U.S. Steel (X). None of these companies has an economic moat, in our opinion.

Andrew Lane does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.