With Nippon Deal In Trump's Court, JPMorgan Turns Cautious On US Steel

Lekha Gupta

April 16, 2025

JP Morgan analyst Bill Peterson downgraded United States Steel Corporation (NYSE:X) from Overweight to Neutral and cut the price forecast from $43 to $38.

The analyst cited the pending NSC deal, which seems to be ‘in the hands of the Trump administration’ as the reason.

In recent news, Nippon Steel and United States Steel are reportedly negotiating with the Trump administration to revive their $14 billion merger by significantly boosting investments in U.S. Steel’s Rust Belt facilities.

Also Read: Trump Torpedoes US Steel Deal, X Stock Tumbles Despite Bullish Chart

The analyst writes that, on the demand side, construction is under pressure, while tin/container demand should benefit from S232 tariffs.

Meanwhile, Peterson believes that the auto sector may experience short-term demand pull-through from earlier pre-buying, with longer-term tariff risks potentially impacting demand.

Regarding BRS2’s ramp-up, the analyst expects upstream melt capacity to be fully online in the second half of 2025, with the entire facility reaching steady-state production by 2026.

The analyst notes that last month, the company guided for the first quarter of 2025 adjusted EPS loss of 53 cents–49 cents (vs. consensus loss of 30 cents) and adjusted EBITDA of about $125 million, in line with prior outlook of $100 million – $150 million.

Consequently, Peterson now estimates softer FRP shipments this year and flat next year (-0.9%/+0.4% vs. previous +0.1%/+0.0%) to account for auto tariff risks.

Investors can gain exposure to the stock via VanEck Steel ETF (NYSE: SLX) and SPDR S&P Metals & Mining ETF (NYSE:XME).

Price Action: United States Steel shares are up 0.65% at $41.66 at the last check Wednesday.

Read Next:

Cramer Praises Trump For Pushback On Nippon ‘Dumper’ Steel, Calls The Block A ‘Smart Move’

Photo by T. Schneide via Shutterstock

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