Fri, Feb. 6, 12:34 PM
- Wells Fargo’s Sam Dubinsky recommends shorting U.S. Steel (X +0.4%) and buying Steel Dynamics (STLD +1.1%) because of how the companies can hold up against declining U.S. scrap metal prices.
- Dubinsky says STLD and X are both trading at 7x EBITDA at $500/ton hot-rolled steel, but believes STLD has a better balance sheet, leaner cost structure and no oil country tubular goods exposure, which could be a greater than anticipated headwind for U.S. Steel; if steel pricing proves worse than forecast, STLD is simply a safer play.
- The analyst also estimates Nucor (NUE +2.4%) is trading near 8.5x EBITDA, while AK Steel (AKS +2.9%) is at 14x.
Tue, Jan. 27, 3:34 PM
- AK Steel (AKS +5.8%) beat Q4 expectations amid rebounding auto and construction industries, prompting S&P Capital to upgrade shares to Strong Buy from Hold with a $6 price target, encouraged by stronger-than-expected synergies from the Dearborn acquisition, lower input costs and energy costs, and a strong auto market that comprised half of AKS revenue in 2014.
- However, other analysts gave the beat a cooler reception; Citigroup's Brian Yu, for one, maintains a Sell rating and $2 price target, unconvinced by Q4's improved shipments of 2M tons and realized pricing of $987/ton vs. the firm's model of $980/ton.
Tue, Jan. 27, 9:46 AM
- AK Steel (AKS +5.1%) opens higher after reporting a strong Q4 earnings beat and a 36% increase in revenues to $2B on sharply higher shipments, due to strong automotive sector demand and a boost from a recent acquisition.
- Average selling prices fell 4% Y/Y to $987/ton from $1,031/ton reported in the year-ago quarter, mostly on the higher proportion of hot-rolled coil shipments in the overall sales mix stemming from its September acquisition of Dearborn Works; shipments jumped 42% due to strong demand in the automotive sector and the Dearborn Works acquisition.
Tue, Jan. 27, 9:10 AM
Tue, Jan. 27, 8:32 AM
Mon, Jan. 26, 6:10 PM
- U.S. Steel (NYSE:X) says it will temporarily curtail operations at two plants in Alabama and one in Texas that sell steel pipes and tubular products to oil and gas drillers, potentially affecting more than 1,900 workers.
- Earlier this month, U.S. Steel said it would idle plants in Ohio and Texas, and possibly lay off up to 756 workers.
- The fall in oil prices could decimate an entire industry that has been built up in recent years to supply drilling in places such as the Marcellus Shale and the Gulf of Mexico; “There’s still millions of tons of capacity set to come online, and it’s just going to be too much," says one analyst.
- Other steelmakers with key U.S. operations include NUE, STLD, MT and AKS.
Mon, Jan. 26, 5:30 PM
Mon, Jan. 26, 12:29 PM
- With just a week of bargaining left until the national contract for U.S. refinery workers expires, talks over a new agreement between the United Steelworkers union and lead oil company negotiator Royal Dutch Shell (RDS.A, RDS.B) appear to be making little progress.
- The USW rejected the first industry proposal on Friday, calling it "inadequate and offensive."
- The union is seeking annual pay raises double those of the last agreement, and wants work given to non-union contractors to go to USW members.
- Reltaed steel tickers: X, AKS, NUE, STLD, CMC, ATI
Fri, Jan. 23, 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. 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. 18, 2014, 9:14 AM| 9 Comments
Dec. 17, 2014, 5:40 PM
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.
Dec. 5, 2014, 2:36 PM
- U.S. Steel (X +0.7%) depends on U.S. oil producers for a big chunk of its profits, prompting some analyst warnings of potential trouble ahead for the company.
- Axiom Capital's Gordon Johnson, for one, says that when oil prices in 2009 were at today's levels, U.S. Steel’s tubular business saw a contraction in overall rig counts and began generating negative operating margins.
- Morgan Stanley’s Evan Kurtz, however, sees upside for Steel Dynamics (STLD +0.2%) as consensus begins to incorporate lower scrap costs.
- Also: MT +0.6%, AKS -0.7%, NUE -0.7%,
Nov. 19, 2014, 12:26 PM
- Iron ore prices extend their historic decline, approaching $70/dry ton in a retreat to the lowest level in more than five years, as analysts rule out any Chinese restocking that typically supports prices towards the end of each year.
- The price is now at a level at which all but the three biggest low-cost producers - Rio Tinto (RIO -2.4%), BHP Billiton (BHP -3%) and Fortescue (OTCPK:FSUMF -8.8%) - are either generating losses or are struggling to break even.
- Steel stocks also are getting whacked: SCHN -5.4%, X -4%, PKX -3%, AKS -3%, CMC -2.7%, STLD -2.5%, NUE -1.6%, MT -1.3%.
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