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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%.
Nov. 3, 2015, 4:45 PM
- The U.S. set preliminary import duties on corrosion-resistant steel products from China, India, Italy and South Korea, but they are not nearly as heavy as many observers had expected, and steel company stocks (NYSEARCA:SLX) initially fell after the announcement at ~3:00.
- While the preliminary duties on China are high, as expected, duties on Korea and Italy were "much smaller than expected," while there were no duties for Taiwan, which industry followers consider “disappointing," according to Axiom Capital's Gordon Johnson.
- Axiom sees the news as a slight loss for U.S. steel industry participants, as it suggests incremental duties on outstanding trade cases will focus on China, with little emphasis on other countries China can easily use as an intermediary to get steel into the U.S.
- X +0.6% in regular trading but -8.1% AH; AKS -2.9% in regular trading and -2.4% AH.
- Also, in regular trading: CLF +7.3%, JOY +0.7%, CAT +0.5%, NUE -0.3%, CMC -0.4%, RS -1.8%.
Oct. 28, 2015, 12:49 PM
Aug. 11, 2015, 11:35 AM
- Commodity metals are getting hammered by China's devaluation, with aluminum trading down nearly 2%, copper prices lower by 2.5% and nickel plunging more than 3.5%.
- Hardest hit of the mining stocks is Freeport McMoRan (FCX -14.1%), which has completely surrendered yesterday's 10.8% surge; shares now are down 72% over the past year and 57% YTD.
- Iron ore miners are sharply lower: BHP -5.5%, RIO -4.2%, VALE -7.8%, CLF -7.3%.
- Steel companies: X -9.7%, MT -5.1%, AKS -5.7%, NUE -2.9%, STLD -3.5%, CMC -4%.
- Also: AA -6%, CENX -4.9%, TCK -8.2%, SCCO -4.9%.
- ETFs: XLB, JJC, XME, SLX, PEO, VAW, COPX, DBB, UYM, CU, IYM, JJN, SMN, JJU, PICK, MATL, CPER, JJT, BOM, RJZ, FXZ, PYZ, BOS, FOIL, JJM, LD, BDD
Apr. 23, 2015, 3:49 PM
- Steel companies are higher after Nucor (NUE +3.5%) reported Q1 earnings that exceeded analyst estimates and came in above the company's own earlier guidance of $0.10-$0.15.
- NUE says overall Q1 operating performance at its steel mills segment fell significantly Q/Q, as expected, primarily due to lower selling prices and margins resulting from the high level of steel imports flooding the domestic market, which the company says accounted for 33% of the finished steel market in the quarter.
- NUE reports shipments to outside customers declined 9% and average selling prices dropped 5% during the quarter.
- NUE says its automotive markets remained strong in Q1, and continues to see improving demand in non-residential construction markets; it expects Q2 earnings will improve Q/Q with steel mill margins likely to increase but remaining under pressure because selling prices have not fully stabilized and imports remain high.
- Related tickers: X +4.5%, AKS +6.7%, MT +4.9%, RS +9.5%, STLD +3.5%, WOR +2%, CMC +2.7%.
Apr. 14, 2015, 3:23 PM
- Despite his expectation of continued low steel prices, Clarkson Capital's Lee McMillan launches coverage on several steel makers with Buy recommendations for Arcelor Mittal (MT +5.2%), AK Steel (AKS +4.6%) and Nucor (NUE +0.7%) based on their exposure to the U.S. automotive and construction industries.
- Steel makers that rely on the oil and gas industry, which typically accounts for 10% of U.S. steel demand, likely will be in a rut for a while; U.S. Steel (X +3.9%) ranks a Sell rating for its high fixed costs and reliance on the U.S. energy sector, McMillan says.
- Rated Hold are Commercial Metals (CMC +0.8%), Reliance Steel (RS -1.9%) and Steel Dynamics (STLD +1.9%).
- U.S. steel producers are likely to file dumping charges against China following the release of their Q1 results, but imports will continue to depress U.S. steel prices, the analyst predicts.
Mar. 31, 2015, 10:16 AM
- J.P. Morgan tells clients to short U.S. Steel (X -2.7%), expecting the company to operate at a loss this year.
- JPM cuts its estimated FY 2015 EPS for the company to a loss of $0.25 from its earlier outlook for a $1.57 gain, and sees FY 2016 EPS of $1.42 vs. its earlier view for $3.00.
- The firm believes a strong dollar, weak oil prices and slowing growth in China will weigh on metals demand.
- Also: AKS -3.6%, NUE -1.3%, STLD -2.1%, WOR -3%, CLF -3.9%, CMC -1.8%, TMST -3.9%, SCHN -1.9%.
- Earlier: U.S. Steel to idle Minnesota plant
Mar. 20, 2015, 2:39 PM
- AK Steel (AKS -5.2%) is sharply lower after reporting downside Q1 guidance, citing lower than expected carbon steel spot market shipments and prices due to high levels of what it sees as unfairly traded imports, but most other steel names sport nice gains: X +4.3%, MT +2.9%, NUE +2.8%, STLD +1.9%, WOR +2.5%, CMC +2.3%.
- Various factors but especially the strong dollar are sparking a surge in steel imports, resulting in a tough Q1 for all U.S. steel producers, but most of the companies also say Q2 and H2 2015 should be a bit better as demand is fairly strong in many end markets (Briefing.com).
- NUE said this week that steel mill margins for all products should improve in Q2 as it begins to realize the benefits of lower raw materials costs and selling prices begin to stabilize, while STLD said continued strength in domestic steel consumption from the auto, manufacturing and construction sectors should support a stronger Q2 and H2.
- Credit Suisse analysts prefer US Steel in the group "with the caveat that this is a 1-3 year view."
Jan. 23, 2015, 11:18 AM
- Iron ore miners are broadly lower after Goldman Sachs becomes the latest global bank to deliver a dismal outlook for the steel-making ingredient, forecasting an average price of $66/metric ton this year from an earlier estimate of $80.
- Goldman is at least the fifth bank this month to lower estimates, citing rising seaborne supplies and weaker demand growth from China; just last week, Citigroup cut its iron ore forecast to $58 in 2015, down from its earlier $65, and UBS lowered its target to $66 from $85.
- Low-cost expansions likely will continue as major producers are still mining iron ore at a profit, which would expand the global seaborne surplus from 47M tons this year to 260M tons by 2018, Goldman says.
- Iron ore miners: VALE -8%, BHP -3%, RIO -3.6%, CLF -7.6%.
- Copper miners: FCX -2.6%, SCCO -2.4%, TCK -2.6%.
- Steel companies: X -6.3%, MT -7.1%, AKS -3.2%, NUE -1.2%, STLD -3%, CMC -3.8%, TMST -2.4%.
- Earlier: Goldman gives in on mined commodities
Dec. 12, 2014, 2:54 PM
- Energy-related demand represents ~13% of U.S. steel sales, which Credit Suisse analysts say places most at risk US Steel’s (X -1.9%) tubular goods business, which produces OCTG products, and Commercial Metals' (CMC -3%) steel mills business, which has a significant exposure to Texas and other oil-rich regions.
- The firm also says North American iron ore producers such as Cliffs Natural Resources (CLF -3.4%) have higher energy intensities than Australian and Brazilian producers at both the mine and on the sea, and the lower oil price in theory partially closes the gap between North American and Brazilian/Australian supply, but any gains would be short-lived.
Oct. 21, 2014, 12:34 PM
- The U.S. says it will terminate a 15-year-old deal sheltering Russian flat-rolled steel producers from high import duties, and anti-dumping duties will apply beginning Dec. 16.
- U.S. steel producers, including U.S. Steel (X +5%) and Nucor (NUE +2.2%), complained to the Commerce Department in July that the reference price set in a 1999 agreement, which also set a cap on imports, had been below U.S. market prices since 2004.
- However, J.P. Morgan analysts see no reason for buying steel stocks (NYSEARCA:SLX), saying the move impacts only 1.4% of U.S. market share; in fact, the firm suggests shorting steel stocks on the "misinterpretation" of duties on Russian imports of hot rolled steel.
- Other steels also are higher: AKS +3.9%, MT +3.6%, CMC +2.3%, STLD +1.7%.
Sep. 3, 2014, 12:36 PM
- U.S. Steel (X +2.7%) remains solidly higher on the day after Morgan Stanley named it a top pick, and is now up by a third YTD; most steel peers also are higher, with MT +2.7%, STLD +2.5%, NUE +2.2%, CMC +2.2%, but AKS -4.8% after guiding Q3 earnings below consensus.
- Axiom Capital’s Gordon Johnson admits he’s been wrong on U.S. Steel this year, but he stands by his bearish call, noting that what really got the stock going was guidance for Q3 pointing to ~$1/share in GAAP EPS.
- Johnson thinks the optimism is not realistic and sees 10%-15% downside to U.S. HRC spot prices as likely before year-end 2014 and noting the inherent volatility in the company's earnings to shifts in U.S. HRC spot prices, elevated by resiliency in U.S. HRC spot prices (-1.2% YTD), despite the fall in both iron ore (-35% YTD) and coking coal prices (-21% YTD).
Sep. 3, 2014, 9:13 AM
- U.S. Steel (NYSE:X) +2.7% premarket as Morgan Stanley upgrades its view on the steel sector to Attractive while raising its price target for X, the firm's top pick in the sector, to $60 from $35 with a bull case for $87.
- Stanley sees the steel industry benefiting from both structural and cyclical improvements, and likes U.S. Steel's compelling company-specific cost-cutting initiative; the firm also thinks X is getting ready to walk away from its loss-making Canadian operations.
- Shares also may be getting a lift because of its exposure to favorable headlines out of eastern Europe: US Steel Europe, representing 17% of overall revenue, includes a steel plant and coke production facilities in Slovakia.
- ArcelorMittal (NYSE:MT), with a strong presence in the area, also +2.7%; the other U.S. steel producers - AKS, CMC, NUE, STLD - have less exposure to the region and are little changed premarket.
Jun. 4, 2014, 2:39 PM
- A bullish outlook on steel released in Japan by Credit Suisse could be moving sector stocks in the U.S., Barron's Ben Levisohn writes, even though conditions for the U.S. industry don't look especially promising.
- U.S. Steel (X +3.9%) is enjoying its biggest one-day percentage gain since Dec. 23; some sources cite news of its idling two plants in Texas and Pennsylvania that produce tubular products for the oil and gas industries, but that was announced two days ago.
- Suggesting investors tread lightly on steel stocks, Wells Fargo analysts expect steel imports to remain at elevated levels as domestic vs. international price spreads are more than $100/ton across all flat and long products; imports typically increase when U.S. pricing is at a greater than $100 premium.
- Also: AKS +3.4%, SCHN +1.7%, CMC +0.8%, STLD +0.3%, NUE -0.2%.
Mar. 18, 2014, 3:21 PM
- Steel stocks are higher despite Nucor's (NUE +0.8%) disappointing guidance, which apparently was more than offset by price increases at ArcelorMittal (MT +1.3%) as mills try to stem the downtrend in prices during the past two months.
- Nomura lowers its Q1 earnings estimates for steel stocks ahead of mid-quarter updates from NUE, mini-mill peer Steel Dynamics (STLD +1.5%) and AK Steel (AKS +6%), which are expected within the coming week, but the firm continues to positively view stock performance in the sector going forward.
- Also: X +5.3%, TX +3.1%, SCHN +2.4%, CMC +2.1%, GGB +1.8%, RS +1.8%.
Sep. 18, 2013, 3:59 PM
- BMO initiates coverage of steel companies (SLX) Nucor (NUE +2.7%), Commercial Metals (CMC +2.3%), U.S. Steel (X +2.6%) and Steel Dynamics (STLD +0.9%).
- NUE, started at Outperform with a $54 price target, is arguably the best of breed, with the highest margins in the group and best balance sheet; it also has best execution and benefits from growing low-cost DRI production.
- CMC also is initiated at Outperform; it trades at the lowest valuation in the steel sector based on adjusted EV/EBITDA, dividend yield and free cash flow yield, and is leveraged to non-residential construction expected to improve over the next one or two years.
- X is started at Market Perform; its balance sheet is by far the most stretched of the group at 5x net debt to EBITDA for FY2013, and there is potential for dilution from an out-of-the-money convertible bond due in 2014.
- Earlier: STLD is started at Market Perform.
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