Yahoo Finance Why Companhia Siderurgica Nacional Stock Popped 11% This Morning
What happened
Shares of Brazilian steelmaker Companhia Siderurgica Nacional (NYSE: SID) jumped more than 10% in early Tuesday trading before falling back to book a still respectable 9.6% gain as of 12:15 p.m. EDT.
Yet Companhia Siderurgica Nacional didn't report any earnings today, nor does there seem to be any other company-specific news that's moving the stock. So the question is why, in an era of higher tariffs on steel imports to the U.S., a Brazilian steel "exporter" would be doing so well?
Why is this steel stock suddenly red hot? Image source: Getty Images.
So what
Here's one possible explanation: This morning, German metals distributor Kloeckner announced that its US business is "benefiting heavily from price increases following that country's imposition of tariffs in the second quarter," as reported by S&P Global Platts. Investors may be making an analogy to Companhia Siderurgica Nacional, which owns a 400,000-ton-per-year steel factory in Indiana, and thinking that if Kloeckner is doing well because of the tariffs, then Companhia Siderurgica Nacional might do similarly well.
Now what
Whether or not that thinking is valid, Companhia Siderurgica Nacional commented back in March that it doesn't expect to see any "significant" damage to its business from the tariffs. Only 6% of its steel exports go to the U.S. after all, and the company says it can easily divert that production to the internal Brazilian market.
With Companhia Siderurgica Nacional stock down 10% over the past year, and the danger perhaps not as great as was once thought, it could have been due for a rebound.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
