Oct. 17, 2014, 11:47 AM
- AK Steel (AKS +11.2%) surges after Nomura upgrades shares to Buy from Neutral and raises its price target to $10 from $7, citing $2 of EPS power by 2016.
- Nomura foresees a material increase in EBITDA and free cash flow for AKS in 2015, owing to significant raw material cost down, accretion from the Dearborn acquisition, improvements in electrical steel markets, higher automotive margins, elimination of substantial weather and outage costs from 2014.
- The firm forecasts 2015 EBITDA of $795M vs. the consensus estimate of $697M and free cash flow of $1.95/share, and sees 2016 EBITDA of $856M and free cash flow of $2.57/share, thanks to additional synergies at Dearborn, further declines in ore prices, and a full-year of contribution from Magnetation.
Oct. 17, 2014, 9:20 AM
Oct. 2, 2014, 12:47 PM
- AK Steel (AKS +1.6%) is upgraded to Buy from Hold at Deutsche Bank on valuation in the wake of a 28% stock correction since Sept. 17.
- The firm sees AKS as the main beneficiary of lower iron ore prices, and notes that AKS has just completed its Severstal Dearborn acquisition which should improve scale/operational flexibility; also, the Magnetation pellet plant started operations three months ahead of schedule and is expected to provide iron ore pellets at a discount to market price.
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.
Sep. 17, 2014, 9:15 AM
Sep. 17, 2014, 8:52 AM
- Nucor (NYSE:NUE) +4.4% premarket after raising Q3 earnings guidance substantially, now seeing EPS of $0.70-$0.75 vs. analyst consensus estimate of $0.62; guidance includes a $0.02 charge related to the partial writedown of some assets.
- NUE expects much improved overall operating performance at its steel mills in Q3, seeing increased profitability in sheet, structural, bar and plate steel.
- Structural steel had no major outages in Q3, compared to the planned three week outage at Nucor-Yamato Steel in Q2.
- Says imports remain at high levels, applying downward pressure on pricing.
- The news follows a strong Q3 outlook from U.S. Steel; X +12.8%, AKS +5.7%, STLD +2.3% premarket.
Sep. 16, 2014, 3:41 PM
- AK Steel (AKS +4.4%) says it sees the recently completed Severstal Dearborn acquisition as accretive to its earnings and credit enhancing; it anticipates annual cost-based synergies of ~$50M, with ~$25M realized in 2015.
- Cowen raises its price target to $11 from $9 as it becomes more constructive on AKS shares, especially given the recent ~18% pullback; the firm thinks AKS could benefit from upside to production guidance, an improving product mix at the Dearborn facility, and margin expansion on lower raw material inputs (Briefing.com).
Sep. 8, 2014, 7:49 AM
- AK Steel (NYSE:AKS) -2.8% premarket after announcing concurrent offerings of stock and senior notes.
- AKS says it is launching an offering of 35M common shares, with an underwriters option to purchase up to an additional 5.25M shares; AKS also is offering a total of $430M in senior notes due 2021.
- The company plans to use all proceeds from the notes plus part of the proceeds from the stock sale to fund the acquisition of steel plants from Severstal Dearborn.
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.
Sep. 3, 2014, 8:50 AM
- AK Steel (NYSE:AKS) says it expects Q3 EPS of $0.05-$0.10, better than Q1 results but below the $0.24 analyst consensus estimate.
- The guidance does not include results related to the acquisition of Severstal Dearborn, which AKS expects to complete in Q3.
- Sees Q3 shipments of ~1.35M tons, down ~3% Q/Q, due to reduced production at the Ashland Works blast furnace due to a recent unplanned maintenance outage and subsequent production shortfall; Ashland has returned to operation but at below-normal production, and expects to accelerate a planned outage from H1 2015 to Q4 2014.
- AKS -1.2% premarket.
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. 22, 2014, 1:14 PM
- The ITC has voted to impose anti-dumping duties on steel pipe imports from South Korea, India, Taiwan, Turkey, Saudi Arabia, Ukraine, and Vietnam. Tariffs as high as 118% can be assigned.
- U.S. Steel (X +2.3%), among the companies to have filed an ITC complaint on the matter, is rallying. As is AK Steel (AKS +3.7%). A trade group estimates imports of "oil country tubular goods" (the focus of the ITC ruling) accounted for almost 2/3 of the U.S. market last year.
- In a statement, U.S. Steel says it will "continue to evaluate all of its options." That includes "further litigation" against Saudi Arabia, which was excluded from the final ITC ruling due to an amended final determination by the DoC, and the Philippines and Thailand, who were fully exempted.
Jul. 30, 2014, 11:18 AM
- U.S. Steel (X +17.9%) jumps to a three-year high after reporting better than expected Q2 earnings and sales and forecasting an improvement in the current quarter.
- “Steel consumption has bounced back quite well,” CEO Mario Longhi said in today's earnings conference call, adding that the market is consuming flat-rolled steel - the company's largest segment by sales - "at a rate well above 2013 levels."
- Longhi noted that the flat-rolled segment experienced operational challenges in Q2 - such as the Great Lakes facility being offline for half the quarter - that were among the most difficult in the company's history, but all operations now are back online, and the company was able to handle back orders by the end of Q2.
- The CEO says X is not seeing the typical summer slowdown, mostly because automotive has remained strong and service center inventories are below normal levels; also, the lean supply chain inventories are carrying over to Q3.
- Other steel names also move higher: AKS +3.5%, STLD +0.7%, NUE +0.4%.
Jul. 29, 2014, 3:38 PM
- AK Steel (AKS +3.1%) moves out to two-and-a-half year highs after reporting a surprise Q2 operating profit and reversing from a $0.30 loss a year ago.
- AKS posted Q2 sales of $1.53B on shipments of nearly 1.4M tons, up 6% Y/Y despite extreme winter weather conditions that slowed shipments of iron ore pellets; sales in the year-ago quarter totaled $1.4B on shipments of ~1.3M tons.
- The increase in shipments was primarily a result of the recovery from the planned and unplanned outages at the Ashland Works blast furnace in Q1.
- The average selling price during Q2 rose 3% Y/Y to $1,095/ton as a result of higher spot market prices for carbon steel products.
- After overcoming Q2's challenges, CEO James Wainscott says AKS is "well positioned for a much better third quarter and second half of 2014."
Jul. 29, 2014, 8:31 AM
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