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U.S. Steel lifts peers on plan to idle plants

  • Steel companies are surging following U.S. Steel's (X +6%) decision to idle two blast furnaces in the U.S. and one in Europe to "better align production in response to current market conditions."
  • AKS +3.6%, NUE +3.4%, STLD +2.6%, SCHN +1.7%, CMC +1.5%, MT +0.9%.
  • Cowen analyst Tyler Kenyon views X's actions as a "prudent move and an incremental positive for H2 sheet supply dynamics... While a large inventory buffer may challenge immediate supply side relief, a pricing recovery into year end appears more palpable."
  • Cowen reiterates its Market Perform rating on X, but Vertical Group double-upgrades shares to Buy from Sell, with analyst Gordon Johnson saying the company did the "unthinkable" in its move to idle the three plants.
  • Johnson suspects other U.S. blast furnace steel mills such as AKS or MT could idle capacity imminently, as U.S. Steel has "effectively given everyone the greenlight to defy Trump and cut jobs to keep profits in the green."
  • ETF: SLX

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