Tenaris Plunges 5.83%, What Hidden Forces Are Fueling This Freefall?

Summary
• Tenaris (TS) crashes 5.83% below $35.26, breaching its 200-day moving average of $36.35
• Quarterly sales drop 7% amid Brazil and European shipment declines
• Steel sector ETF (SLX) slumps 1.54% as U.S. tariffs intensify global pressure

Thursday’s sharp selloff in Tenaris has sent shares reeling into oversold territory, with intraday volatility swinging between $34.87 and $35.88. The move follows a 7% plunge in second-quarter net sales attributed to weakened demand in key markets. With the steel sector grappling with U.S. tariffs and mixed earnings from peers like Nucor (NUE), investors are bracing for further turbulence.

200DMA Breakdown Exacerbates Profit-Selling Pressure
Tenaris’ 5.83% intraday decline has been compounded by a critical technical breakdown below its 200-day moving average of $36.35, triggering algorithmic selling and panic among short-term traders. This follows a 7% drop in second-quarter net sales to $3.09 billion, driven by reduced offshore project shipments in Brazil and Europe. The company also warned of U.S. tariff impacts on OCTG imports, which could depress demand through the remainder of 2025. With the stock trading at a 15.6% discount to its 52-week high of $40.87, profit-taking and margin calls have amplified the downward spiral.

Steel Sector Suffers as Nucor Defies Weakness
While Nucor (NUE) bucked the trend with a 0.29% intraday gain on strong pricing and demand, Tenaris’ struggles reflect broader steel sector headwinds. The VanEck Steel ETF (SLX) fell 1.54% as U.S. tariffs on steel imports and slowing global demand pressured producers. European steelmakers have also flagged declining demand and pricing, with ArcelorMittal recently lowering guidance. Tenaris’ 7% sales drop highlights its vulnerability to regional project cycles, contrasting with Nucor’s diversified domestic exposure.

Bearish Setup: Options and ETFs to Capitalize on Volatility
• 200-day average: $36.35 (below)
• RSI: 43.65 (oversold)
• MACD Histogram: -0.1208 (bearish divergence)
• Bollinger Bands: $36.61–$39.29 (price near lower band)

The technical outlook favors a continuation of the selloff, with key support at $35.00 and resistance at $36.50. The VanEck Steel ETF (SLX) remains a proxy for sector risk, while Tenaris’ options chain offers high-leverage bearish plays. Two contracts stand out:

• TS20250815P35 (Put):
- Strike: $35.00 | Expiration: Aug 15 | IV: 20.29% (moderate volatility) | Delta: -0.461 (strong price sensitivity) | Theta: -0.0174 (moderate time decay) | Gamma: 0.2657 (high sensitivity to price movement) | Turnover: 2,815 (liquid)
- Payoff (5% downside to $33.47): $0.57 per share. This put offers 50%+ leverage and strong gamma, ideal for a 5% pullback.

• TS20250815C37.5 (Call):
- Strike: $37.50 | Expiration: Aug 15 | IV: 30.98% (high volatility) | Delta: 0.1625 (low price sensitivity) | Theta: -0.0168 (moderate time decay) | Gamma: 0.1078 (moderate sensitivity) | Turnover: 1,520 (liquid)
- Payoff (5% downside to $33.47): $0.00. While this call has limited upside in a bearish scenario, its high gamma could benefit from a rebound above $37.50. Aggressive bears should prioritize the TS20250815P35 put for near-term volatility.

If $35.00 breaks, TS20250815P35 offers short-side potential. Watch for a rebound above $36.50 to trigger a reversal trade.

Backtest Tenaris Stock Performance
The backtest of the TS performance after a -6% intraday plunge shows favorable results, with win rates and returns indicating resilience and potential for recovery. Here's a detailed analysis:1. Frequency and Win Rates: The event occurred 640 times over the backtested period. The 3-day win rate was 52.50%, the 10-day win rate was 54.69%, and the 30-day win rate was 52.34%. This suggests that following a -6% plunge, the TS tends to rebound over various short-to-medium-term horizons.2. Returns: The average 3-day return was 0.13%, the 10-day return was 0.34%, and the 30-day return was 1.09%. While the immediate post-plunge returns are modest, the longer-term returns show a positive trend, with the maximum return during the backtest period being 2.45% on day 59 after the plunge.3. Maximum Return: The maximum return during the backtest was 2.45%, which occurred on day 59. This indicates that while the TS may not always immediately recover from a -6% plunge, it has the potential for positive returns in the following days and weeks.In conclusion, while the immediate response to a -6% intraday plunge in TS may be muted, the backtest suggests that it is likely to recover and even surpass its previous levels over a 30-day horizon, making it a potentially viable strategy for investors looking to capitalize on rebounds following significant downturns.

Break Below $35.00 Could Spark Fresh Wave of Liquidation
Tenaris’ breakdown below the 200-day moving average and oversold RSI (43.65) suggest further downside toward $32.50–$33.00. A close below $35.00 could trigger stop-loss orders and accelerate the selloff. Watch Nucor (NUE) for sector leadership cues—its 0.29% gain contrasts with Tenaris’ collapse. For options traders, the TS20250815P35 put offers a high-leverage play on a 5% pullback. If $35.00 holds, a rebound may test the 200-day average at $36.35, but current momentum favors a continuation of the bearish trend. Aggressive bulls may consider TS20250815C37.5 into a bounce above $37.50.