The price of shares of leading steel manufacturer United States Steel (NYSE:X) has soared 57.5% year-to-date, underpinned by spiking steel prices on a surge in demand triggered by the world's economic recovery. However, since the steel-price rally is expected to be short-lived now that steel production is accelerating, the question is, will X be able to maintain its stock price momentum, or will it suffer a pullback? Read more to find out.Leading integrated steel producer United States Steel Corporation (X) operates through three segments: North American Flat-Rolled; U.S. Steel Europe; and Tubular Products in the United States and Europe. X’s stock has surged 57.5% year-to-date and 141.9% over the past year. The rally can be attributed to a spectacular rise in steel prices on robust demand as manufacturing and construction sectors ramp up their operations.
However, the stock may now have limited upside because the heightened steel prices are not expected to be sustainable. Furthermore, since President Biden’s infrastructure plan—which is expected to boost the steel industry demand—could face an uphill battle for passage, the industry’s growth prospects remain uncertain.
Although X has been benefitting significantly from its strategic acquisition of the remaining stake in Big River Steel, which delivered 32% EBITDA margins in the first quarter of 2021, its increasing expenses and decreasing cash equivalents could be a cause of concern.