As the Section 232 probe continues, Citi analyst, Alexander Hacking, sees a favorable market for long steel products, as he upgraded Commercial Metals Company CMC to Buy.
“We see the greatest upside from potential Section 232 trade action in long steel products and long steel mills. This is somewhat anti-consensus since investors appear to be playing the theme through higher-beta flat steel mills X and AK Steel Holding Corporation AKS),” Hacking said (Check out Alexander Hacking's track record).
Why Should You Trade Long Products Over Flat Product?
- Long products have a larger market share than flat products.
- It would be much more beneficial for long products to have a quote-based system according to Hacking.
- Hacking sees fewer risks in long products from idled capacity, indirect imports and the exclusion of NAFTA.
Overall, Citi remains Neutral on the U.S. steel sector as margins have contracted significantly and with a less demand from automakers. The United States is also expected to release its findings from the probe as soon as this week, according to White House Press Secretary Sean Spicer.
Related Links:Section 232 Public Hearing Wednesday Is 'Unlikely To Affect Steel Equities'
Steel Stocks Outperform Ahead Of Wednesday's Commerce Department Hearing
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