Jefferies names European stock that will benefit from doubling steel duties

Swedish steelmaker SSAB will be the beneficiary of rising steel plate prices in the U.S. market after the increase in trade duties - thanks to the company's large U.S. division, according to analysts at Jefferies. In general, trade duties of 50%, announced by US President Donald Trump at the end of last week, will have a negative impact on European steel producers and the US auto industry, Wall Street warned.

Steelmaker SSAB will be «the beneficiary of rising steel plate prices in the U.S.,» Jefferies analysts wrote, with their note followed by CNBC. They note that the price hike will benefit SSAB's U.S. unit, which, according to the company itself, is the largest producer of plate steel in the region. At the same time, the duty hike will be a negative factor for European steel producers exporting to the U.S., Jefferies emphasized.

Shares of SSAB at trades in Sweden on Monday, June 2, rose in the moment by 7.8% to the maximum mark since May 7. Since the beginning of the year, the company's securities have risen by almost 40%. Now they are advised to buy 9 analysts out of 14, whose estimates considers MarketScreener. Four more recommend keeping these stocks in the portfolio and only one suggests selling.

On Friday, May 30, U.S. President Donald Trump said he plans to double the duty rate on the country's steel imports to bolster the domestic steel industry, reports Reuters. He later clarified that the increased tariffs will also apply to aluminum and will take effect on Wednesday, June 4.

Quotes of U.S. steel producers expectedly soared in New York trading on Monday, June 2: securities Cleveland-Cliffs jumped 22.6%, Nucor - about 8%, and Steel Dynamics - 9%.  

Shares of the largest car companies reacted with a fall. Depositary receipts of Toyota fell in price by 1%, quotations of the auto concern Stellantis, which owns such brands as Jeep, Dodge, Fiat, and Peugeot, fell by 3.2%. The securities of Ford and General Motors collapsed by about 4.5%. Raising import duties on steel and aluminum will increase the cost for automakers to produce cars in the U.S., explains WSJ. The two metals make up a significant portion of a car's weight and a substantial portion of its production cost, the newspaper points out. Doubling the current duty would increase total costs for manufacturing from Trump's duties by about 5 percent - to about $7,000 per car, the WSJ wrote, citing an estimate by analysts at Bernstein.