The Zhitong Finance App learned that BNP Paribas downgraded Cleveland Cliff's (CLF.US) stock rating from “hold” to “sell”, and the target price is $16.50. The reason is that there is too much uncertainty about the potential impact of the upcoming US presidential election on the steel industry. By the close, the company was down 1.98% to $20.30.

At the beginning of this year, the president of Nippon Steel (Nippon Steel), Japan's largest steel manufacturer, spoke out that he was confident of successfully acquiring American Steel (X.US) for $14.9 billion, and former President Donald Trump also stated in early February that if he wins the election again, he will definitely block this acquisition deal.

Analyst Tristan Gresser (Tristan Gresser) wrote, “Positive: Trump won to prevent Nippon Steel from acquiring American Steel. On the other hand, Biden won and passed the deal. As soon as the coin is thrown, the US steel market will fluctuate between game-changing steel consolidation and industry deflation.”

Gresser said that Nippon Steel does not have a major steel mill in the US, so the company's successful acquisition of American steel will not lead to a decrease in the number of independent US steel producers, but the conclusion of the acquisition may pose a threat of deflation in steel prices.

Previously, Cleveland Cliff tried to buy American Steel, but it was rejected. However, if Nippon Steel's acquisition of US Steel is blocked, Gresser believes Cleveland Cliff may try to acquire the company again, thereby improving its ability to match supply and demand as a large producer.

Ironically, American buyers of American steel are more likely to choose to close their plants. Gresser believes that the outlook for the industry is too uncertain and therefore does not recommend holding Cleveland Cliffs.

Furthermore, Morgan Stanley mentioned the prospect of steel prices falling when it recently downgraded Cleveland Cliff's rating.