Six steel stocks downgraded at Macquarie

|By:, SA News Editor

Steel stocks (SLX -2.4%) look expensive following their post-election rally, but the strong U.S. dollar could keep a lid on prices while slowing growth in China could derail the steel price rally, Macquarie analysts say as they downgrade several names in the sector.

U.S. steel prices have risen to $550-$560/ton, driven partly by tight domestic supply and a lack of imports, but at current levels steel stocks reflect steel prices of more than $600/ton, increasing the risk posed by the shares, the firm says.

Macquarie downgrades Nucor (NUE -0.5%), TimkenSteel (TMST -1.9%) and Worthington (WOR -3.5%) to Underperform from Neutral, and cuts Steel Dynamics (STLD -0.3%), AK Steel (AKS +0.1%) and Reliance Steel (RS -0.1%) to Neutral from Outperform; U.S. Steel (X -2%) is maintained at Underperform, while Argus analysts downgraded X, saying the shares are overbought.