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Tue, Feb. 9, 12:39 PM
- ArcelorMittal (MT -9.9%) chalks up another 52-week low, capping a 23% plunge in three days since delivering unwelcome news that it would raise $3B through a rights issue to reduce its debt burden after posting a ~$7.9B net loss last year.
- J.P. Morgan downgrades MT to Neutral from Overweight, citing a continued weak fundamental picture for global steel markets, with 2015′s price falls yet to trigger any significant capacity reductions, while also estimating a further 4% reduction in Chinese consumption in FY 2016.
- While the firm sees a better environment for U.S. steel stocks, their shares also are lower today: X -6.8%, AKS -6.3%, NUE -2.1%, STLD -3.2%.
Tue, Jan. 26, 11:38 AM
- AK Steel (AKS +6%) is sharply higher after Q4 earnings came in well above Wall Street expectations, as the company reduced its exposure to the spot markets as part of its effort to improve margins.
- Adjusted earnings do not include slightly more than $200M in total charges related to pension accounting and temporarily idling the company's Ashland Works blast furnace and steelmaking operations.
- Q4 shipments fell to 1.66M tons, down from 2.01M tons a year ago and 1.87M tons in Q3, which AKS attributes to its decision to focus on sales of higher margin products and reduce sales to the carbon steel spot market.
- AKS says its average selling price for Q4 was $929/ton, up 2% Q/Q, mostly attributable to a greater proportion of higher value steels sold to the automotive market and improved selling prices for electrical steels.
Tue, Jan. 26, 9:22 AM
Tue, Jan. 26, 8:35 AM
Fri, Jan. 22, 12:33 PM
- Morgan Stanley analyst Evan Kurt expects steel prices to continue to rise and average $445/ton in 2016, which he says may result in downward revisions to Wall Street estimates for U.S. Steel (X -1.2%), AK Steel (AKS -1%) and Nucor (NUE +0.2%).
- Kurt calls Steel Dynamics "the safest way to play a modest steel market recovery,” while heavily shorted names such as X and AKS could squeeze into results, "but we would sell the news."
- The firm rates STLD at Overweight with a $27 price target, while X, AKS and NUE are all rated Equal Weight with respective targets of $19, $5 and $59; Cliffs Natural Resources (CLF -7.3%), rated Underweight with a $2 target, is called a “high cost producer in an oversupplied iron ore market.”
- "No need to own coal names into the quarter,” Kurt writes, as coal market conditions have deteriorated with a warmer than normal winter leading to large build-ups of coal inventories; he downgrades Consol Energy (CNX -0.8%) and Foresight Energy (FELP +11.4%) to Equal Weight with respective $29 and $12 price target.
Tue, Jan. 12, 5:37 PM
Dec. 23, 2015, 10:58 AM
- U.S. Steel (X -1.4%) and AK Steel (AKS -2.4%) are lower after preliminary anti-dumping tariffs levied on corrosion-resistant steel imports from China, India, South Korea and Italy turn out to be somewhat disappointing.
- The preliminary decision from the U.S. Department of Commerce sets duties of up to 256% on imports from China, while imports from India face duties of up to 6.9%, most Korean companies had duties set at up to 3.5%, most Italian firms had duties set at 3.1% and no tariffs were levied on Taiwan.
- AK Steel says it is pleased with the preliminary dumping margins assigned to China, but is disappointed that the dumping margins for India, Italy, Korea and Taiwan were not higher, "as they do not appear to adequately address the dumping that we believe is occurring in the U.S. market."
- BofA Merrill says the 256% tariff levied on China may grab headlines but already was expected, while the other levies mean those countries will be able to keep shipping to the U.S. "without much pain."
- Also: STLD +2%, NUE -0.2%, WOR +0.2%.
Dec. 17, 2015, 11:42 AM
- U.S. Steel (X -8.9%), AK Steel (AKS -6.8%), Cliffs Natural Resources (CLF -8.7%) and Foresight Energy (FELP -3.6%) are all downgraded to Sell from Hold at Deutsche Bank, which says balance sheets in the segment have reached distressed levels amid constrained cash flows in the weak commodity price environment.
- Necessary capacity cuts could be slow in coming due to the "momentum and magnitude of new projects still ramping, natural currency hedges in a number of producing countries, continued cost-cutting, barriers to exit and social goals such as maintaining employment in countries such as China," the firm writes.
- In cutting its price target for AKS to $1 from $3, Deutsche Bank says it expects free cash flow to remain constrained for another two years, with the company forced to draw down on its revolver ($748M as of Q3) to fund part of its capex and interest expenses.
Dec. 17, 2015, 9:20 AM
Dec. 10, 2015, 3:24 PM
- Steel prices in the U.S. have dropped so much that imports are finally declining, providing some relief for shares of downtrodden U.S. Steel (X +12.8%) and others in a year that has been one of the worst in decades.
- While steel prices have plunged 41% Y/Y, mill capacity utilization rose 2.8 percentage points last week in the first uptick since September, and steel imports have been lower than a year ago in each of the six months through October, the most recent month of available U.S. Census Bureau data.
- At the same time, China said yesterday it would cut some import and export taxes next year, raising concerns that cheaper Chinese products could exacerbate a global oversupply of basic materials such as steel and chemicals.
- Also today: ATI +14%, AKS +6.2%, NUE +2.5%, WOR +3.6%, STLD +5.5%, RS +2.8%, MT +4.6%.
- Earlier: U.S. Steel oversold as December marks steel price bottom, analyst says (Dec. 9)
Dec. 9, 2015, 3:22 PM
- Steel prices have bottomed in December, and steel companies could see upside potential over the next few months as major trade case decisions are released, Rosenblatt says.
- The firm remains Neutral on U.S. Steel (X +8.9%) but says it came away from recent discussions with the company and separate North American channel analysis with a less negative view, with potential positive catalysts on the horizon which could reduce selling pressures on the shares.
- Nevertheless, Rosenblatt says near-term data on the domestic steel and tubular segments remains challenging, and expects U.S. Steel's Q4 EPS results and FY 2016 EBITDA guidance to reflect aggressive demand/supply pressures.
- Also: MT +2.3%, AKS +7%, NUE +1.4%, TX +2.7%, CLF +0.9%, WOR -0.5%.
Dec. 8, 2015, 9:15 AM
Dec. 2, 2015, 12:45 PM
- ArcelorMittal (MT -9.1%) is downgraded to Neutral from Buy at Citigroup, less than two months after upgrading it to Buy from Sell, admitting "we knew we were early, but not this early."
- Citi says the rapid deterioration of the spot steel market has pushed trough earnings into 2016, and now sees a prolonged down cycle potentially deeper than in the 1990s when global prices dropped 76% over 11 years; with supply response out of China piecemeal at best, the firm "expects increasing pressure on ex-China capacity to rationalize leading to increased dependence on the support from protectionist measures."
- Steel-related names are broadly lower: X -3.4%, AKS -2.1%, VALE -1.2%, NUE -1.1%, CLF flat.
Nov. 24, 2015, 9:14 AM
- U.S. Steel (NYSE:X) -3.8% premarket after BofA Merrill Lynch cuts its stock price target to $3 from $7 and says it has concerns about the company's liquidity.
- The firm also cuts its estimated 2016 hot rolled coil forecast to an average $455/short ton from $475.
- Yesterday the company announced the idling of operations at its Granite City, Ill., plant.
- Also, AK Steel (NYSE:AKS) -4.3% premarket.
Nov. 10, 2015, 2:21 PM
- Trade cases will not be enough to lift prices and margins for steel companies such as U.S. Steel (X +1%) and AK Steel (AKS +2.9%), Barclays analysts believe.
- "The just-determined duties are a good step... and the trend in trade protections by other countries is an effective pushback, but the mills’ strategy has to be bigger and more proactive in response to what will likely remain a persistent environment of global oversupply," Barclays says.
- The firm says the most likely outcome over the next several months appears to be a modest emergence from the trough, with Steel Dynamics (STLD -1.3%) and Nucor (NUE -0.4%) best positioned to emerge relatively stronger.
Nov. 4, 2015, 3:48 PM
- Steel company shares are sliding after U.S. Steel (X -14.3%) reported weaker than expected Q3 results and warned of sharply lower shipments and realized prices for 2015 than it previously projected.
- The company drastically reduced its full year adjusted EBITDA guidance to $225M from an earlier forecast for $700M-$900M, and said commercial markets are not improving as management had expected; steel selling prices reversed direction in Q3 as excessively high levels of imports and lower steel scrap prices caused spot prices to reach new lows for the year.
- Deutsche Bank downgrades the stock to Hold from Buy, citing the Q3 miss and dreary outlook.
- Also: AKS -4.2%, CLF -2.2%, NUE -1.6%, CMC -1.2%, STLD -0.9%, RS -0.3%.
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