Several steel stocks, including Nucor Corp, Steel Dynamics Inc, and Commercial Metals Company, have been downgraded by UBS due to a significant rally in their share prices.

The downgrade is a result of weak third-quarter earnings, disappointing fourth-quarter guidance, and ongoing pressures related to pricing and demand. The U.S. steel sector had previously experienced a rally in anticipation of trade protection policies but is now facing challenges such as declining shipments and softer steel pricing. UBS expects a recovery in demand and prices by 2025, although there are still risks, particularly concerning first-quarter estimates.

Commercial Metals' downgrade is due to its retention of gains post-election, despite a $330 million court ruling and a reduced outlook for rebar demand. UBS has set price targets at $149 for Steel Dynamics, $156 for Nucor, and $56 for Commercial Metals. Analysts suggest that while 2025 may show an improving demand trend, a higher yield curve following the recent election could hinder new construction project approvals.