- US Steel (X -1.3%) is downgraded to Underperform from Neutral at Credit Suisse due to relative valuation and expected lower iron ore pricing in H2 2014.
- Equity prices, and particularly US Steel, seem to be overlooking recent commodity price weakness as a short-term destock related phenomenon - perhaps not surprising given the 2012 collapse and rebound in iron ore prices - but Credit Suisse believes that, unlike 2012, structural changes to the global ferrous supply/demand balance through mid-year will see commodity prices settle at a lower level in H2 than they did after the 2012 destock shock.
- Also, the firm thinks US Steel's relative outperformance vs. international peers including ArcelorMittal (AT) likely is due to EM/DM exposure trade, but the gap will close at some point.
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U.S. Steel downgraded at Credit Suisse, as iron ore pricing to settle lower
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