Tue, Apr. 19, 3:39 PM
- Analysts at both Barclays and BofA Merrill Lynch raise their price targets for some steel industry stocks (SLX +4%), seeing industrial activity picking up for this spring and tight domestic supplies and low imports supporting higher steel prices.
- But the firm still expect pricing to come down over H2 as overseas production ramps back up and domestic scrap flows improve.
- Barclays says US Steel (X +4%) and AK Steel (AKS +4.5%) still look expensive but the stocks should benefit in the near term from the momentum driving hot rolled coil pricing; the firm raises its price targets for X to $15 from $7, AKS to $3 from $2, Steel Dynamics (STLD +1.5%) to $27 from $22, and Nucor (NUE +0.9%) to $52 from $47.
- BofA Merrill raises its stock targets for X to $9 from $1, AKS to $2.50 from $1, STLD to $27 from $24, and NUE to $55 from $50.
- However, BofA also downgrades Reliance Steel (RS -0.2%) to Underperform from Neutral, thinking the stock’s strong move has taken its valuation well above its historical EBITDA averages.
- Now read Reuters: China, major producers fail to reach steel deal
Fri, Mar. 11, 11:39 AM
- Credit Suisse is bullish on the U.S. steel sector (SLX +0.6%), believing the U.S. market seems close to a cyclical low point for volume and pricing, with a very strong outlook for both for the rest of 2016.
- Global prices have surged in recent months, and the firm thinks U.S. prices likely will experience the strongest recovery, increasing with the global market and premiums to foreign material likely expanding from trade case protection.
- Credit Suisse initiates U.S. Steel (X +1.8%) with an Outperform rating, expecting the company to generate high incremental margins as volume recovers and seeing 2016 free cash flow and EBITDA beating expectations; X also has the highest leverage to spot market recovery, the firm says.
- However, the firm rates AK Steel (AKS -4.5%) at Underperform, citing the high fixed cost base and Ashland outage as major headwinds; it expects AKS to burn cash at a rate of $43M in 2016 and $109M in 2017.
- Steel Dynamics (STLD +0.7%) also is rated Outperform, while Commercial Metals (CMC -0.1%) and Nucor (NUE +0.3%) are rated Neutral.
Wed, Mar. 2, 2:47 PM
- Steel company shares are soaring following news of U.S. anti-dumping duties in the cold-rolled sheet trade case, with China receiving a 266% duty, which should effectively lock the country out of the U.S. market; Japan and Brazil were nailed with respective duties of 71% and 39%.
- J.P. Morgan analysts call the tariffs a win for U.S. steel stocks including U.S. Steel (X +22%), AK Steel (AKS +17.4%), Steel Dynamics (STLD +5.2%) and Nucor (NUE +2.6%), as trade cases filed by the U.S. and around the world eventually will close the door to the export market for surplus Chinese steel, and China will have to cut its steel capacity to come in line with Chinese domestic demand.
- With steel prices rebounding off of a bottom and the companies clearly demonstrating they have enough liquidity, J.P. Morgan believes the stocks should continue to outperform as shorts find it difficult to portray a possibility of near-term bankruptcies.
- Also: MT +11.7%, CLF +19.5%, CMC +1.2%, WOR +2.9%, ZEUS +13.2%, SLX +6.9%.
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. 19, 2015, 2:27 PM
- There's plenty more pain ahead for steel stocks such as AK Steel (AKS -6.1%), U.S. Steel (X -3%), Steel Dynamics (STLD -4.7%), Nucor (NUE -2.8%) and ArcelorMittal (MT -4.3%), according to Cowen analyst Anthony Rizzuto.
- Prices for hot rolled coil likely need to reach the upper $400s/ton for integrated producers to return to profitability, and negative sentiment is at extreme levels, but Rizzuto says recent capacity closures and upcoming preliminary trade case determinations may serve as a catalyst for near-term price stabilization.
- Shares of steel stocks (SLX -3.9%) are all trading sharply lower after China's Q3 GDP showed the slowest annual rate of growth (+6.9%) since the financial crisis in 2009.
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
Jan. 14, 2015, 7:57 AM
- Mining stocks look headed for sizable losses, as copper prices sink to five-and-a-half year lows and the World Bank lowers its forecast for global economic growth.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) -11.5% in London trading, Antofagasta (OTC:ANFGF) -7% in London, Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) -9.5% in London, Vedanta (OTCPK:VDNRF) -18% in London, Rio Tinto (NYSE:RIO) -4.3% premarket in the U.S., VALE -2.9%, FCX -5.1%, CLF -2.6%.
- BHP Billiton (NYSE:BHP) -7.5% in London and -5.5% U.S. premarket after S&P Capital IQ downgraded shares to Hold from Buy, expecting "weaker commodity prices to increasingly impact on group profits as hedges expire and see currency headwinds from a stronger [U.S. dollar]."
- ETFs: XLB, XME, SLX, COPX, VAW, UYM, CU, IYM, HAP, IRV, MXI, SMN, GNR, GUNR, PICK, MATL, FXZ, PYZ, CRBQ, RTM, CCXE, FMAT, GRES, SBM
Dec. 22, 2014, 11:24 AM
- South Korea says it has filed a complaint with the WTO seeking to nullify U.S. tariffs levied on imports of certain Korean steel products.
- The U.S. Commerce Department in July imposed tariffs of up to 16% on South Korean steel pipes and tubes used for oil drilling in response to the alleged dumping of steel products in the U.S., and the International Trade Commission confirmed the tariffs in August in what was viewed as a victory for U.S. steelmakers (NYSEARCA:SLX).
- Related stocks: X -5.4%, AKS -5.7%, NUE +0.2%, STLD -1.1%.
Dec. 17, 2014, 5:09 PM
- AK Steel (NYSE:AKS) +7% AH after saying it sees Q4 EPS of $0.05-$0.10, above analyst consensus estimate $0.04, despite incurring ~$31M in costs associated with a planned Ashland Works blast furnace outage.
- AKS says it expects shipments to jump 37% Q/Q to 2M tons in the current quarter from ~1.46M shipped in Q3, helped by acquisitions and strong demand from the auto industry.
- AKS also expects to benefit from lower iron ore, carbon scrap and energy costs in Q4 compared to Q3.
- AKS shares already had surged 6% in the regular trading session, as steel companies (NYSEARCA:SLX) finished broadly higher.
Dec. 10, 2014, 2:59 PM
- J.P. Morgan analysts remain cautious on the steel industry (NYSEARCA:SLX), as the high U.S. steel price premium over Chinese prices should continue to attract imports into the U.S. and put downward pressure on domestic steel prices.
- Hot rolled coil prices have fallen 12% from a high of $700/ton this summer, which JPM says was largely due to temporary production outages which are now back in supply.
- While integrated steel mills U.S. Steel (X -5.4%) and AK Steel (AKS -3.3%) are more leveraged to pricing momentum, the firm prefers Steel Dynamics (STLD -3.2%) and Nucor (NUE -2.6%) given their variable cost structures and significant leverage to an eventual recovery in non-residential construction activity.
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. 18, 2014, 3:21 PM
- In the doldrums not long ago, steel stocks are now among the hottest in the market; in the last three months, X +81%, STLD +37%, AKS +30%, NUE +12%.
- Steel Dynamics (STLD +0.6%) was the latest to report a strong summer, guiding for above-consensus Q3 earnings as shipments and metal spreads are forecast to improve in spite of continued elevated import activity; Nucor did so yesterday morning (NUE +0.4%).
- Still, Credit Suisse is not ready to embrace the steel company revival, at least when it comes to AK Steel (AKS -4.8%), whose self-help story has less scope for upside surprise than US Steel (X +0.2%); one obvious contrast is that X is looking at shutting down blast furnace steelmaking capacity in North America, while AKS is buying more of it.
- ETF: SLX.
Aug. 27, 2014, 2:58 PM
- The U.S. will not go ahead with planned import duties on specialized steel from Japan, Germany and Poland after the U.S. International Trade Commission found the imports were not harming local industry.
- The U.S.-based public affairs lobby of the Japanese steel industry welcomes the decision, which came after a complaint lodged by AK Steel (AKS -2.9%) and others.
- The decision affects companies including Nippon Steel & Sumitomo Metal (OTC:NISTF) and Germany's ThyssenKrupp (OTC:TYEKY, OTCPK:TYEKF), which had been named in the dispute.
- Also: X -1.1%, STLD -0.4%, WOR -0.6%.
- ETF: SLX
Aug. 25, 2014, 10:23 AM
- South Korea is vowing to take action against U.S. anti-dumping tariffs imposed on South Korean steel pipes and tubes for oil drilling, as it worries about the impact on the country's $818M/year export of the products to the U.S.
- The ITC's confirmation of the tariffs last week is widely seen as a victory for U.S. steelmakers, especially U.S. Steel (X +2.6%), who say South Korean and other foreign competitors sold their products below cost to boost their market share in the U.S.
- South Korea could file a complaint to a U.S. court or take action at the WTO to get the punitive U.S. tariffs nullified, but analysts say the dispute isn't likely to escalate quickly.
- ETF: SLX
Apr. 8, 2014, 3:38 PM
- Steel companies (SLX +1.4%) are higher after Cowen analyst Anthony Rizzuto says improving steel market fundamentals are likely to provide a catalyst for steel stocks to rise.
- With Q1's bad weather now finished, the domestic steel market appears to be tightening and sentiment improving, Rizzuto says, expecting investors to focus more on the outlook for the remainder of 2014 than on Q1 results.
- The firm rates US Steel (X +3.1%), ArcelorMittal (MT +2.5%) and Reliance Steel (RS +0.3%) at Outperform; AK Steel (AKS +5.9%), Nucor (NUE +1.7%) and Steel Dynamics (STLD +1.3%) are Market Perform.
Feb. 11, 2014, 10:14 AM
- U.S. Steel (X -0.5%) is downgraded to Sell from Neutral with a price target cut to $23 from $28 at Citigroup after shares have climbed more than 35% in six months.
- The company appears stronger with new management removing costs, but this may not be enough in a falling price environment, Citi says.
- Credit Suisse also is out cautious on the steels (SLX), believing that a natural gas price spike could leave steel producers in the cold.
- Meanwhile, Steel Dynamics (STLD +2.9%) is upgraded to Buy from Neutral at BAML, which notes that STLD generates a strong cash flow.
VanEck Vectors Steel ETF (SLX) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Steel Index (STEEL), which is intended to track the overall performance of companies involved in the steel sector.
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