MARKET REPORTBULLISH

Steel Stocks Rally Even as Global Output Slips on China Slowdown

Nucor and Cleveland-Cliffs climbed even though Morgan Stanley says worldwide steel production is edging lower, dragged down by declines in China.

Executive takeaway

US steelmakers Nucor and Cleveland-Cliffs advanced even as Morgan Stanley flagged a decline in global steel output, with weakness in China offsetting growth elsewhere.

Nucor and Cleveland-Cliffs shares climbed even as Morgan Stanley noted that global steel output has edged lower, with a decline in Chinese production offsetting growth in the rest of the world. The divergence suggests investors are betting the pullback in Chinese supply could benefit US producers by easing global oversupply pressure that has weighed on steel prices in recent years. Separately, Hengli took the top spot in global containership orders, a sign that shipbuilding and industrial demand tied to trade flows remains active even as steel production growth slows in some regions. What remains unresolved is how much of the China decline is structural, tied to that country's property slowdown, versus temporary. Morgan Stanley's commentary did not specify the size of the output decline or a timeline for when Chinese production trends might reverse.
What would change this view

This bullish read on US steelmakers would be undercut if Chinese steel output rebounds sharply in coming months, reversing the supply tightening that appears to be supporting Nucor and Cleveland-Cliffs shares.

Wire sources cited

Produced automatically by the INDY NEWS Desk from the public wire sources cited above, and checked against them before publication. Market commentary, not investment advice.