What happened

Shares of United States Steel (X 0.13%) lost 24.2% in May, according to data provided by S&P Global Market Intelligence, as a barrage of headlines throughout the month put continuous pressure on the stock. U.S. Steel has been at the center of some heated political debates since the 2016 election, and in May, the news flow turned decidedly against the company.

So what

U.S. Steel opened May with a strong earnings report, announcing first-quarter adjusted earnings of $0.47 per share, ahead of the $0.22 per-share estimate, on revenue of $3.5 billion. This was up 11% year over year and more than $125 million ahead of expectations. The company attributed the beat to its investment in upgrading facilities in recent years and said it would continue that process with a $1 billion commitment to modernizing a Pennsylvania operation.

Inside a steel mill.

Image source: Getty Images.

But Wall Street was more focused on weakness in the markets that U.S. Steel hopes to sell into. UBS downgraded the company to sell from neutral based on worries that the capital investment will not be enough to reverse market-share losses.

Other steel companies were also hit in May by the White House's decision to lower certain tariffs on steel imports from Turkey and the removal of tariffs on Canada, following the agreement to a trade deal. Hopes for a large infrastructure investment plan out of Washington, D.C., which could stoke steel demand, also fell apart due to infighting between Republicans and Democrats.

Now what

U.S. Steel has done an admirable job revamping its operations and paying down debt, but it's still operating in a difficult market competing against some streamlined competitors. Domestic hot-rolled coil steel capacity forecasts were bearish for steel companies even before the relaxation of tariffs, and the political developments will not make it easier for U.S. operators.

We're at the difficult part of the cycle for steelmakers, in general, and U.S. Steel, in particular. The market's May sell-off seems appropriate.