Credit Suisse downgraded the US steel sector in general on Monday, expecting prices to fall due to oversupply, according to reports in financial media. US steel prices and production have hit multi-year highs, the brokerage firm said, while cutting the sector’s rating to “market weight” from “overweight” as capital spending has “disappointed” investors.
On a producer-specific basis, Credit Suisse downgraded Nucor, Steel Dynamics, Inc. and Cleveland Cliffs to “neutral.”
The firm also noted that oversupply could be worsened by the resolution of talks between the US and Canada regarding steel tariffs. Credit Suisse said “odds are in favor” of a tariff deal sorted out by early 2019.
Specifically, analysts at the firm said it is likely that the US and Canada will come to an agreement on quotas and tariffs will “go away.”