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U.S. Steel's Future Depends On What China Does Next

Apr. 05, 2021 8:00 AM ETUnited States Steel Corporation (X)12 Comments
Harrison Schwartz profile picture
Harrison Schwartz


  • U.S. Steel has risen tremendously as COVID-19 supply-chain issues limit production and increase demand.
  • China recently drastically cut production in its steel-producing hub which creates far more steel than the entire U.S.
  • Officially, the cuts were made in order to reduce pollution for climate goals, but the country's severe coal shortage is likely a contributing factor.
  • If China keeps these cuts long-term or if the country's low production costs finally rise, U.S. Steel's rally may only be beginning.
  • However, if the situation "returns to normal", U.S. Steel may drop as its high leverage requires more consistent profits than has been found this decade.

Steelworker starting molten steel pour in steelworks
Photo by Monty Rakusen/Cultura via Getty Images

This first quarter of 2021 has seen many aggressive moves across financial markets. The main theme has been a return to the "relation" trade wherein long-term rates are rising and benefiting the value of cyclical

Data by YCharts

This article was written by

Harrison Schwartz profile picture
Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. He has professional experience in the private equity, real estate, and economic research industry. Harrison also has an academic background in financial econometrics, economic forecasting, and global monetary economics.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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