Nomura Securities Downgrades U.S. Steel (X) and AK Steel (AKS) to Neutral

Nomura Securities downgraded U.S. Steel (NYSE: X) and AK Steel (NYSE: AKS) from Buy to Neutral with price targets of $21 (from $37) and $4 (from $10), respectively.

Analyst Curt Woodworth believes that there are two major structural changes underway that should significantly alter the global steel landscape in the coming years, namely USD strength and cost curve deflation driven by lower raw material prices and freight rates.

"Cost curve deflation in Russia and China, two keyproducing markets, coupled with weak domestic demand trends in both countries should result in continued export pressure into the global market. We believe these forces are highly disruptive to the US market, especially for integrated producers, but also EAF players to some degree. We note that both flat-rolled and long product import pressure has been a significant headwind for the industry over the past year and Nomura expectations for further USD appreciation into 2016 suggests import pressure will remain high."

For an analyst ratings summary and ratings history on AK Steel click here. For more ratings news on AK Steel click here.

Shares of AK Steel closed at $4.32 yesterday.

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