Mar. 25, 2014, 10:41 AM
- U.S. Steel (X +2%) CEO Mario Longhi will tell the U.S. Congressional Steel Caucus today that South Korean steelmakers are dumping steel pipes and tubes in the U.S. and have created a network of related companies in order to evade U.S. trade laws.
- Sales of pipes and tubes sold to oil and gas extracting companies have helped profitability at U.S. Steel, representing 48% of 2013 operating income, as well as other steelmakers such as Nucor (NUE +0.6%).
- Other steel names: AKS +2.3%, ZEUS +2.2%, WOR +1.4%, STLD +1%, CMC +0.9%.
- Aluminum names: CSTM +2.5%, CENX +2.1%, KALU +1%, AA +0.4%, RS +0.2%.
Mar. 21, 2014, 1:28 PM
- AK Steel (AKS +3.4%) expects to report a loss of $0.44-$0.49 per share, brought on by a number of factors not expected to continue, among them higher energy costs thanks to the severe winter.
- Shipments of 1.25M-1.275M tons is are about a 10-12% decrease from Q4. The decline is attributed to the blast furnace outage at Ashland Works.
- The average selling price in Q1 of $1,095 is a 6% gain from Q4.
- Barclays' take: "AKS is best-positioned among the steel producers to deliver significantly improved operating results as 2014 progresses."
- Press release
Mar. 18, 2014, 5:45 PM
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%.
Feb. 20, 2014, 12:22 PM
- Nomura’s Curt Woodworth, who has warned that steel prices would drop and hit shares of AK Steel (AKS -0.9%) and US Steel (X +1.4%), is back with an update because steel prices have dropped faster than he expected.
- Hot rolled sheet prices continue to roll over with spot values near $630-640/ton, Woodworth writes, buttressing his cautious view on U.S. integrated steel stocks as he sees potential for further declines in iron ore and scrap values into the spring and hot rolled steel likely to retest the $600/ton barrier by May.
- The analyst cuts his earnings estimates for X, AKS, Nucor (NUE) and Steel Dynamics (STLD), though he continues to see “greater value” in NUE and STLD.
Feb. 19, 2014, 12:57 PM
- Although the Commerce Department's decision not to impose tariffs on South Korea’s steel pipes used in the oil industry is not yet finalized, analysts believe the negative surprise of zero dumping margins and pressure on margins of tubular goods is of particular concern to US Steel (X -7.4%), concurrent with continued weakness in flat steel prices to begin 2014.
- Wells Fargo analysts believe it is now less clear-cut if OCTG profitability can recover to prior levels, and that investors will be discouraged by the news as a favorable trade case ruling was part of the bull thesis on shares; the firm notes that every $30/ton reduction in domestic steel prices equates to roughly $450M in EBITDA headwinds, which are hard to offset merely by cost reductions.
- Other steel producers also feel the pain: TS -6.1%, AKS -4.1%, NUE -0.6%.
Feb. 5, 2014, 3:29 PM
- The U.S. Commerce Department says steel imports rose 23% in January from December, and Axiom Capital thinks that means steel prices likely will begin to fall, taking US Steel (X -1.7%) and AK Steel (AKS -3.1%) down with them.
- U.S. steel prices, now at significant premiums to global steel prices, "are likely in the beginning innings of a MAJOR CORRECTION LOWER," Axiom says, adding that it would be pressing shorts in US Steel and AK Steel given their exposure to prices and fixed cost structures vs. their non-integrated peers, plus massive pension liabilities.
Jan. 28, 2014, 3:11 PM
- AK Steel (AKS +19%), which reported a Q4 profit that beat expectations, and US Steel (X -1.2%), which lost money (unadjusted) for the seventh time in nine quarters, are moving in different directions today: AKS has jumped nearly 20%, while US Steel has dropped more than 1%.
- AKS beat forecasts primarily due to higher shipments, partially offset by a lower average selling price per ton; the average selling price per ton fell 4% Q/Q due to a lower proportion of value-added product shipments to the spot market.
- X’s results were disappointing in terms of guidance, and management failed to provide measurable cost savings targets or other Project Carnegie-related initiatives.
- Shares of Steel Dynamics (STLD +0.6%), which met earnings forecasts, and Nucor (NUE +0.6%), which beat, are up slightly.
Jan. 28, 2014, 12:45 PM
Jan. 28, 2014, 9:10 AM
Jan. 28, 2014, 8:34 AM| Comment!
Jan. 28, 2014, 12:05 AM
Jan. 27, 2014, 5:30 PM
Jan. 27, 2014, 3:25 PM
- Higher steel prices for U.S. producers helped spark US Steel (X +0.7%) and AK Steel (AKS -2.4%) during the latter half of last year, but J.P. Morgan's Michael Gambardella sees falling steel prices now posing a risk for those stocks.
- Steel price momentum appears to be fading based on weaker than expected January benchmarks and more importantly signs of stress in Turkey, the biggest importer of U.S. scrap; also, the rapid rise in U.S. steel prices raised premiums over Chinese prices to near record levels with early signs of the resulting increased import pressure on U.S. prices.
- Gambardella thus reiterates his bearish view on US Steel and AK Steel while favoring Nucor (NUE) and Steel Dynamics (STLD) for their "variable cost structures and significant leverage to an eventual recovery in non-residential construction activity"; UBS stated a similar preference earlier this month.
Jan. 17, 2014, 5:58 PM
- Steel stocks are starting to cool off after a hot six months, and Citigroup thinks they could cool off even more, with even a pickup in demand after a lackluster 2013 not enough if prices don’t stay high.
- Steel imports that grew 4% in H2 2013 should accelerate and pull down U.S. markets, and weather-disrupted scrap supply which supported prices should normalize/correct in coming months, the firm says, adding that many steel names look less compelling on valuation after big gains.
- Cit rates Steel Dynamics (STLD) a Buy for its valuation, margins and links to the construction industry, while Nucor (NUE) and Commercial Metals (CMC) get Neutral ratings; US Steel (X) is Neutral too, but "would risk multiple-compression if [hot rolled cold steel] corrects."
- The firm's least favorite: AK Steel (AKS), “based on our outlook for negative free cash flow due to pension/OPEB funding obligations, leveraged balance sheet, and challenging stainless markets."
Jan. 16, 2014, 2:56 PM
- The big rally in steel stocks like AK Steel (AKS -1%), US Steel (X -1.3%) and Steel Dynamics (STLD +1.4%) can be explained in part by better steel and company fundamentals, but they also reflect a dose of over-optimism, Nomura says in suggesting investors now on the sideline wait for a better entry point.
- Following the strong sector run, the firm foresees equity price weakness into Q2 as sheet and scrap/iron ore values correct, which it would then view as a better entry point for the integrated steel names.
- Nomura's bias on the group remains positive, and believes particularly AKS and X are becoming more broadly “investable.”
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