Industry Overview - Earnings season is approaching for major North American steel companies, with results expected in the coming weeks [1] - Steel equities have outperformed, rising 17% over the past three months compared to the State Street SPDR S&P Metals & Mining ETF's 15%, driven by a supply-driven rally in Hot Rolled Coil (HRC) prices, which increased by 17% despite weak underlying demand [1] Market Dynamics - HRC metal margins have expanded over 20% relative to pre-tariff levels, and post-tariff mill utilization is approximately 160 basis points above historical norms [2] - Forward demand indicators are mixed as medium- and smaller-scale buyers adjust to trade uncertainty [2] Regulatory Environment - Clarity on the United States-Mexico-Canada Agreement (USMCA) and International Emergency Economic Powers Act (IEEPA) tariffs is needed to trigger larger steel-intensive projects, as the Supreme Court of the US recently deferred these matters [3] Company Projections - Price momentum is expected to continue through at least the first quarter, with projected HRC prices at $955 per ton, although upside is limited by a narrowing import arbitrage and a seasonal slowdown anticipated in summer [4] - Fourth-quarter results are expected to show weaker earnings due to seasonally lighter shipments and lagging sheet contracts, with a potential decline of up to 8% quarter-over-quarter [4] Company-Specific Insights - Nucor Corporation (NUE) is expected to outperform due to a conservative mid-quarter guide, while Cleveland-Cliffs (CLF) may report weakness from elevated costs [5] - Reliance, Inc. (RS) could exceed its fourth-quarter/first-quarter EPS guidance due to stronger pricing and lower customer pushback, despite risks from unplanned outages at Steel Dynamics's Butler mill and a transformer fire at Sinton [5] - Commercial Metals Company (CMC) reported that many large construction projects remain on hold but noted positive momentum in rebar fabrication, an area where NUE has exposure [6]

Group 1 - The Supreme Court is expected to rule on President Trump's tariff policy, which could significantly impact markets and individual stocks, with a complex range of possible outcomes [1][2] - If the tariffs are deemed illegal, companies heavily affected by the tariffs, such as Dick's Sporting Goods, Mattel, and Hasbro, could see substantial reductions in tariff expenses [5][3] - Retailers currently face an estimated incremental tariff of 20%, which could be alleviated if the IEEPA tariffs are struck down, although new tariffs may be introduced at around 15% [6][5] Group 2 - The tariffs imposed last year resulted in an average tax increase of $1,100 per U.S. household, projected to rise to $1,400 this year, but could decrease significantly if the IEEPA tariffs are removed [4][3] - The court's decision may not provide total clarity, as it could either fully support or partially roll back the tariffs, potentially allowing for a grace period for the administration to adjust legal authorities [7][8] - Even if tariffs are fully repealed, the Trump administration has alternative powers to reimpose or replace current tariff levels, adding uncertainty to trade policy [9][8]

A major macro variable lies just in the offing. The Supreme Court of the United States will soon rule on the legitimacy and legality of the International Emergency Economic Powers Act (IEEPA) tariffs. We may not get a decision until early next year, but ifFreelance Financial Writer | Investments | Markets | Personal Finance | RetirementI create written content used in various formats including articles, blogs, emails, and social media for financial advisors and investment firms in a cost-efficient way. My p ...