Seeking Alpha

US Steel, Commercial Metals, Steel Dynamics cut to Hold from Buy at KeyBanc

  • US Steel (X), Commercial Metals (CMC) and Steel Dynamics (STLD) are downgraded to Hold from Buy at KeyBanc.
  • US Steel -1.2% premarket as the firm cites stronger than expected flat rolled pricing headwinds and unexpected negative developments in the tubular segment, which has profit and valuation multiple consequences, as reasons for the downgrade; all else equal, every $5/ton change in flat rolled pricing equates to $70M-$75M in EBITDA and ~$0.35/share in earnings.
  • CMC and STLD are downgraded based on valuation and more cautious near-term expectations, as flat rolled spreads decline and metals recycling profitability struggles in H1.
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