Domestic Reshoring And Low-carbon Investments Will Drive Long-term Metals Resilience

Analysts have raised their fair value estimate for Steel Dynamics from $149.58 to $151.50. This change is attributed to an improved domestic demand outlook, tariff benefits, and valuation premiums for U.S. mills.

Analyst Commentary

Recent updates from Street research offer further insight into the outlook for Steel Dynamics. Analysts have highlighted several factors influencing the company's valuation and near-term performance, reflecting both optimistic and cautious perspectives.

• Bullish analysts see strong near-term support for U.S. steel prices, which may benefit Steel Dynamics and other mills with a domestic focus.
• Tariff-related benefits are expected to have a positive impact on U.S. producers, providing a valuation premium due to enhanced pricing power and protectionism.
• Expectations for improved domestic demand over the medium term, with demand potentially increasing further in 2027, contribute to a favorable growth outlook.
• Steel Dynamics is viewed as a top pick among U.S. names due to its strong domestic exposure, setting it apart from globally oriented competitors.

• Uncertainty remains about the sustainability of steel price increases, especially as additional domestic supply is expected in 2026.
• Some analysts are less confident in the sustained outperformance of U.S. players compared to global peers if demand weakens or pricing momentum shifts.
• Valuation premiums could be at risk if national security protectionism or tariff policies are rolled back or reduced in the future.

What's in the News

• Canada is expected to remove many retaliatory tariffs on U.S. products and will likely maintain 25% import taxes on U.S. steel and aluminum, as well as duties on U.S. automobiles (Bloomberg).
• The Trump administration has expanded its steel and aluminum tariffs by adding 407 derivative product codes to the list of goods subject to higher import duties (Reuters).
• U.S. President Trump imposed new tariffs on exports from dozens of trading partners, including significant duties on goods from Canada, Brazil, India, Taiwan, and Switzerland (Reuters).
• Global steel manufacturers are producing more steel than the world can consume, with excess production projected to reach 721 million tons by 2027; no country is willing to cut back due to the material's economic and security significance (The New York Times).

Valuation Changes

• The Fair Value Estimate has risen slightly, up from $149.58 to $151.50.
• The Discount Rate has edged higher, increasing from 7.80% to 7.85%.
• Revenue Growth expectations have improved modestly, moving from 8.06% to 8.29%.
• Net Profit Margin forecasts have fallen, declining from 11.79% to 10.52%.
• The Future P/E ratio is projected to rise, increasing from 9.77x to 11.04x.