UBS Downgrades Steel Companies

UBS downgraded Nucor Corp (NYSE:NUE), Steel Dynamics Inc (NASDAQ:STLD), and Commercial Metals Company (NYSE:CMC) due to less compelling risk-reward dynamics following a strong share rally.

Nucor and Steel Dynamics were cut to "neutral" from "buy," while Commercial Metals was downgraded to "sell."

Key Factors for Downgrade

• Weak third-quarter earnings
• Disappointing fourth-quarter guidance
• Continued pricing and demand pressures

The U.S. steel sector experienced a rally anticipating trade protection policies but is now facing challenges from declining shipments and weaker steel pricing.

UBS forecasts demand and price recovery by 2025 but cautions about remaining risks, especially for first-quarter estimates.

Commercial Metals’ downgrade also reflects its retention of post-election gains amid a $330 million court ruling and a lowered outlook for rebar demand.

Price targets set by UBS are $149 for Steel Dynamics, $156 for Nucor, and $56 for Commercial Metals.

An analyst noted, "We still think 2025 will show an improving demand trend off a low base, but a higher yield curve post Trump's win is likely to be a headwind to new construction project approvals."