After A Lot Of Pain, Can ArcelorMittal Deliver Some Gains?
Stephen Simpson, CFA
Stephen Simpson, CFA
Wed, Nov. 30, 10:24 AM
- Noting that ArcelorMittal (MT +1.8%) has raised its hot-rolled sheet pricing by $40/ton to $600/ton, J.P. Morgan's Michael Gambardella raises his price targets on several stocks in the U.S. steel industry (SLX +1.5%).
- He increases his target for AK Steel (AKS +3.1%) to $11 from $8.50, on Nucor (NUE +0.6%) to $70 from $59, on Steel Dynamics (STLD +0.9%) to $41 from $31, on U.S. Steel (X +3.3%) to $37 from $29, and on Cliffs Natural Resources (CLF +1.2%) to $10 from $7, while keeping Overweight ratings on all five stocks.
- Gambardella says supply cuts in the U.S. from both capacity curtailments and lower imports should support higher U.S. steel prices, and thinks the Trump administration's impact on trade could be "much quicker and more meaningful" than its infrastructure plans.
Tue, Nov. 29, 11:32 AM
- U.S. Steel (X -3.1%) is sharply lower after Argus downgrades shares to Hold from Buy, saying the stock is now overbought following the 60% surge since the election.
- While unexpected outages at several manufacturing plants likely will weigh on Q4 results, Argus expects U.S. Steel to benefit from the Trump administration’s plans to boost infrastructure spending as well as from further actions to limit the dumping of imported steel, which should provide greater pricing power over time.
- However, the firm thinks U.S. Steel and its peers still face significant uncertainty in the near term, and does not expect increased infrastructure spending to boost earnings until at least mid-2017.
- Among peers: CLF -5.9%, MT -1%, WOR -3.3%, AKS -0.7%.
Wed, Nov. 23, 4:56 PM
- The top U.S. steelmakers' trade group says it has been in contact with Pres.-elect Trump's transition team since his election on Nov. 8, and will seek tougher trade defenses under the new administration.
- The American Iron and Steel Institute - whose members include ArcelorMittal USA (NYSE:MT), Nucor (NYSE:NUE), U.S. Steel (NYSE:X) and AK Steel (NYSE:AKS) -is particularly excited by the presence in Trump's inner circle of Dan DiMicco, a former Nucor CEO who is a top contender for U.S. trade representative in the new administration.
- U.S. steel company stocks have surged 25% since the election, fueled by bets for stronger trade defenses, tax cuts and infrastructure spending, but auto manufacturers have begun to push back; Ford said last week that Trump's plan to slap 35% tariffs on cars and trucks imported from Mexico would hurt the auto industry and the U.S. economy.
Tue, Nov. 22, 3:45 PM
- U.S. Steel (X +11.4%), AK Steel (AKS +10.7%), Steel Dynamics (STLD +4.1%), Nucor (NUE +4.4%) and Commercial Metals (CMC +4.7%) all surge to 52-week highs, extending their Trump-fueled rally as trade protectionist talk suggests that higher than usual premiums can be achieved for steel mills.
- BofA Merrill Lynch raises its 2017 average price estimate for U.S. hot-rolled coil to $650/short ton vs. its prior view of $535, as rising global prices and more protectionism should fuel strong steel prices into 2017 (SLX +5.8%).
- Bloomberg reports BofA boosted its stock price targets for Buy-rated AKS to $12 from $7, STLD to $37 from $30, CMC to $24 from $20, NUE to $65 from $57, and Allegheny Tech (ATI +7.5%) to $20 from $19; the firm remains Neutral on X and Reliant Steel (RS +6.1%).
- Also sharply higher today: MT +8.3%, CLF +13.8%, WOR +5.3%, RIO +4.1%, BHP +5.2%, VALE +7.8%.
Tue, Nov. 22, 9:17 AM
Thu, Nov. 10, 5:36 PM
Thu, Nov. 10, 2:44 PM
- ArcelorMittal (MT +2.4%) sees European Union plans to scrap some free carbon permits for energy-intensive industries as a threat to its European business, the head of the company's Germany operations tells Reuters.
- In April, Europe's highest court ruled that such industries had received too many carbon permits under the EU's Emissions Trading System, which charges power plants and factories for the carbon dioxide they emit; under the new system, steelmakers would receive a sharply reduced number of permits during 2021-30, forcing them to purchase the required licenses.
- "This scenario is threatening the existence of plants in Germany, but also across Europe... Experts calculate that this would leave the industry with additional costs of €10-€30 ($33) per tonne of steel," Frank Schulz tells Reuters.
Wed, Nov. 9, 11:19 AM
- Copper surges to a 15-month high, now +2.9% at $2.45/lb. after rising as much as 3.4% to its highest since July 2015, also boosting other metals as some investors speculate that a Trump presidency could launch significant fiscal stimulus and boost demand for metals.
- In his victory speech last night, Trump said he would prioritize the rebuilding of American infrastructure with hopes of doubling U.S. economic growth.
- Among related tickers: FCX +7.7%, RIO +5.9%, BHP +3.4%, VALE +4.2%, MT +10.6%, X +17.1%, STLD +8.2%, AKS +11%, NUE +11.6%, CLF +12%, RS +8.5%, WOR +3.8%.
- ETFs: JJC, CPER, CUPM
Tue, Nov. 8, 2:02 PM
Tue, Nov. 8, 9:17 AM
Tue, Nov. 8, 8:26 AM
- ArcelorMittal (NYSE:MT) -6.7% premarket after reporting a Q3 earnings beat and a 40% jump in EBITDA to $1.9B, despite a 6.8% drop in revenue to $14.5B.
- But MT warns that lower steel prices in the U.S., combined with the impact of rapidly rising metallurgical coal prices on steel spreads in other areas, likely will lead to a Q/Q decline in profitability in Q4.
- Prices of coking coal, one of the main ingredients in steelmaking, have nearly tripled to ~$236/metric ton in the past five months on declines in output in China and Australia, partly related to poor weather.
- Taking into account an expected full year investment in operating working capital of ~$1B, raised from its earlier outlook of ~$500M, MT expects cash flows from operating activities to exceed capex in 2016.
- For Q3, MT says steel shipments totaled 20.3M tons, a seasonal decline of 8.1% vs. Q2; steel shipments for the first nine months totaled 63.9M tons, down 1.5% Y/Y.
Tue, Nov. 8, 7:53 AM
Tue, Nov. 8, 5:33 AM
- Toyota's (NYSE:TM) operating profit almost halved in the second quarter as a strong yen crimped the value of overseas earnings.
- Despite macro challenges, Credit Agricole (OTCPK:CRARY) outperformed after beefing up its balance sheet and doubling its third quarter net profit.
- ArcelorMittal (NYSE:MT) -7.3% premarket after the steel producer warned of weak profitability in Q4 with higher coal prices hitting margins.
Mon, Nov. 7, 4:42 PM
- The Commerce Department formally opens an investigation into allegations that Chinese steel producers are shipping steel (NYSEARCA:SLX) through Vietnam to avoid U.S. import tariffs.
- A petition filed in September by ArcelorMittal USA (NYSE:MT), Nucor (NYSE:NUE), AK Steel (NYSE:AKS) and U.S. Steel (NYSE:X) alleged that Chinese steelmakers have shipped metal to Vietnam, made enough changes to it that they could then classify it as Vietnamese, and then shipped it to the U.S. under the lower tariffs charged on Vietnamese steel.
- The Vietnamese corrosion resistance processing was "simple" and added only a small amount of value to the finished product imported into the U.S., with up to 90% of the value produced in China, the DoC says.
Sun, Nov. 6, 4:19 PM
- The Department of Commerce is expected to launch a formal investigation Monday into whether Chinese steel companies are shipping steel through Vietnam to avoid U.S. import tariffs, a source tells WSJ.
- The decision to investigate follows complaints from U.S. steelmakers (X, NUE, AKS, MT), and is an escalation of U.S. efforts to stop a glut of China-made metal from flooding U.S. markets.
- Independent trade data supports what the steelmakers are alleging: In H1, shipments of steel from Vietnam to the U.S. increased to 312K tons from 26K tons; over the same period, Chinese exports of steel to Vietnam rose 46% to 6.3M tons from 4.3M tons.
Thu, Oct. 13, 5:35 PM