Can Steel Stocks Work as Steel Prices Fall?

Research evidence excerpt

Can Steel Stocks Work as Steel Prices Fall?

Equity Research

Industry Update — July 15, 2026

Steel

Stocks can outrun HRC, but maybe not the S&P

Our Call Timna Tanners

Falling steel prices are historically tough for steel stocks, yet we expect a modest retreat Equity Analyst | Wells Fargo Securities, LLC

Timna.Tanners@wellsfargo.com | 212-214-5437

and see more limited downside for quality names. Our analysis suggests stocks can buck

Matt Dushkin, CPAthe HRC trend, but generally can't fight both the steel and stock mkt.

Associate Equity Analyst | Wells Fargo Securities, LLC

matt.dushkin@wellsfargo.com | 713-320-7199

Should peak steel prices send a sell signal? In light of our recent call that U.S. steel

prices likely peak in Q3E, we examine how steel stocks perform historically once the

Exhibit 3 - Steel stock correlation vs U.S.commodity corrects. While steel stocks and steel prices conceptually should track one

HRCanother (Exhibit 1), we see historical precedent from stocks holding up in the event of a

modest correction, which is our base case for this cycle given expected sticky S232 tariffs NUE STLD CLF RS

(unlike 2018) and assumed stable demand (unlike COVID). 1-yr 0.91 0.91 -0.23 0.85

5-yr -0.29 -0.35 0.55 -0.54

10-yr 0.36 0.25 0.74 0.25

Tariffs are a game changer. Assuming no steel TACO on 50% Section 232 tariffs, now in

place for a year, we don't see how steel prices correct much below $1K/t for benchmark Source: FactSet, Wells Fargo Securities, LLC

hot rolled coil (HRC). This contrasts with 2018's cycle, which featured carveouts that

reduced S232's 25% tariff effectiveness. RS proved most defensive amid a ~50% drop

in HRC prices from peak to trough, surging 28% vs. a 17%/35% drop for NUE/STLD. We

exclude CLF, as it was primarily an iron ore miner at the time.