"There appears to be too much inventory in the channel right now, and this has impacted mill orders and volumes" in early Q4, says Longbow Research analyst Chris Olins.
The imposition of the tariffs raised futures prices for U.S. hot-rolled coil steel from $660/ton in January to $924 at the start of June, but they have since fallen back to $834.
"Hot rolled coil prices continue to grind lower and our channel checks suggest large size orders at $800/ton or below," says Credit Suisse analyst Curt Woodworth, who has previously downgraded the steel sector (SLX -2.8%) on concerns over a glut in U.S. supply.
Analysts also worry that NUE's investments in new production plants, including a $240M rebar mill in Florida, and other steelmakers' plans to ramp up capacity will exacerbate oversupply.
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