Metal’s scorching rally might have buyers feeling bullish, however JPMorgan analyst Invoice Peterson is throwing in a dose of warning. Whereas Part 232 (S232) tariffs have fueled a shopping for frenzy, the truth of demand stagnation, rising scrap prices and looming financial uncertainty may hold shares from absolutely cashing in.
Tariffs Spark A 36% Rally, However Demand Stays Caught
The restoration of full 25% S232 tariffs beginning March 12 despatched Sizzling Rolled Coil (HRC) costs hovering 36% year-to-date, with mills scrambling to boost costs. However here is the kicker—actual demand hasn’t budged.
Business utilization sits at round 75%, unchanged month-over-month. Peterson warns of a possible de-stocking wave within the second half of the yr as stock ranges stay wholesome and mills ramp up capability.
Learn Additionally: Trump’s 25% Tariffs A ‘Self-Inflicted Wound,’ Says Economist Amid Warnings Of Fewer American Jobs — Peter Schiff Says You’ll Pay Extra For Vehicles And Houses
Import Stress, Recession Dangers Lurk
Regardless of tariff-driven worth hikes, metal faces headwinds from low cost imports. HRC gives within the low $700s for June-July supply threaten home pricing energy and with no ‘glass ceiling’ safety from quota-limited international locations, strain may mount.
Including to the uncertainty, blanket tariffs on Mexican and Canadian metal have been delayed a month, however a Donald Trump presidency may convey renewed scrutiny to the S232 framework.
In the meantime, JPMorgan’s financial workforce is slashing U.S. GDP progress forecasts, seeing an actual danger of a recession squeezing metal demand.
Who Wins In This Balancing Act?
JPMorgan is adjusting its worth targets, betting on some gamers over others.
Nucor Corp NUE will get a worth goal bump to $156, with Peterson favoring its diversified product combine as a buffer towards volatility.
United States Metal Corp X sees its goal rise to $43, with its valuation trying engaging regardless of deal dangers.
Metal Dynamics Inc STLD strikes as much as $140, however stays a ‘show-me’ story with its aluminum rolling mill ramp-up nonetheless unsure.
Cleveland-Cliffs Inc CLF was left unrated resulting from leverage issues and publicity to Canada’s auto market.
Traders Look Previous Q1, Eyes On Q2 & Past
Whereas first quarter outcomes might present the pressure of lagging worth impacts and rising prices, buyers appear extra centered on the again half of the yr.
With estimates now reflecting stronger S232-driven pricing, metal shares may see earnings energy enhance—if demand holds up.
The massive query: can mills preserve momentum, or will recession fears and import strain cap positive aspects? JPMorgan’s name? Proceed with warning and choose your metal bets correctly.
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Momentum12.95
Progress40.20
High quality–
Worth75.84
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