Nucor And Reliance Seen As Steel's Strongest Defenders Against Market Challenges

Fri, Sep 12, 2025, 12:44 PM 4 min read

The North American steel sector is grappling with weak pricing and muted demand growth, leaving investors cautious in the absence of clear catalysts.

With Steel Dynamics (NASDAQ:STLD) and Nucor Corporation (NYSE:NUE) set to issue third-quarter guidance next week, and Commercial Metals Company (NYSE:CMC) approaching its fiscal fourth-quarter report in October, JP Morgan highlights persistent pricing pressure and ongoing industry uncertainty in its latest mid-quarter update on the sector.

Hot Rolled Coil (HRC) prices have fallen 6% quarter-to-date, while scrap prices have held steady but not enough to ease margin pressures.

Also Read: US Increases Steel, Aluminum Tariffs On Over 400 Products Including EV Parts, Wind Turbines, Railcars

Mills have captured market share from imports, aided by structural improvements in metal spreads compared with pre-pandemic and 2024 averages.

Utilization rates have climbed above 79%, supported by a sharp decline in imports, down 16% month-over-month and 21% year-over-year in August, and a 2 million-ton increase in domestic shipments this year.

Yet real demand remains tepid, and inventories appear adequate, reinforcing a cautious approach from buyers still working down stock.

JP Morgan expects this backdrop of uncertain pricing, range-bound trading, and weak demand to extend through the fourth quarter.

Fall outages are smaller than last year, while rising production adds further headwinds. The path to stronger growth, the firm notes, may depend on multiple rate cuts and greater clarity on trade policy with Mexico and Canada, factors unlikely to emerge in the near term.

Investor sentiment mirrors the muted outlook. Despite a 7% quarter-to-date rise in rebar prices, which helped lift CMC shares 21%, upside looks limited heading into the slower winter period.

JP Morgan continues to favor companies with diversified earnings. The firm has issued Neutral ratings with a price forecast of $150 for Steel Dynamics, $10 for Cleveland-Cliffs, and $54 for Commercial Metals Company. Nucor carries an Overweight rating with a price forecast of $165, while Reliance Steel & Aluminum also holds an Overweight rating with a price forecast of $350.

For the third quarter, the firm models earnings declines of 4% for Nucor and 6% for Steel Dynamics versus Bloomberg consensus, citing weaker pricing and shipment risk.

Nucor's results are expected to remain resilient, with softer Brazilian pig iron tariffs offsetting pressure on plate pricing. Steel Dynamics faces lingering coated inventory and ongoing losses at its aluminum rolling mill (ADI).