Shares of U.S. Steel have rallied 30% in the last few days.
The rally might prove to be short-lived as the company faces many headwinds going forward.
U.S. Steel will continue losing money due to the use of blast furnaces.
Cheaper crude oil will hurt U.S. Steel.
Shares of U.S. Steel (NYSE:X) have rallied as much as 30% in the last few days. The primary reason for the rise was the decline in steel imports. In addition, mill capacity utilization also jumped 2.8 percentage points last week, marking the first increase since September.
Given the high short interest, the recent rally can be termed as a short squeeze. However, investors shouldn't expect the stock to sustain the upwards trajectory. With steel price not expected to rebound in the foreseeable future, I think U.S. Steel is a short candidate and investors can use the recent rally to initiate a short position. Let's take a look at the reasons why I think U.S. Steel is a short.
Source: http://seekingalpha.com/