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
Jul. 28, 2014, 5:30 PM
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Jul. 21, 2014, 3:35 AM
- Severstal has announced that it will sell two of its North American steel plants to Steel Dynamics (NASDAQ:STLD) and AK Steel (NYSE:AKS) for $2.3B.
- The Russian steelmaker is attempting to rid its international assets to cut costs.
- Since last year, the company has been looking to sell the two plants, and the sale is not tied to the tensions over the Ukrainian crisis.
- Severstal reported EBITDA of $2B in 2013 - a 4% drop from 2012.
Jul. 14, 2014, 10:29 AM
- U.S. Steel (X -2.1%) gives up much of the bump it received late Friday on the Commerce Department's determination that Korean companies had dumped steel tubes into the U.S and slapped penalties of up to 15.75% on some Korean companies.
- Wells Fargo’s Sam Dubinky says the tariffs aren’t a game-changer for U.S. Steel, and remains cautious as it believes shares have been rewarded prematurely on management’s commitment to institute deep costs cuts, which while positive, could be overshadowed by weaker sheet pricing; the firm also thinks U.S. Steel’s cost advantage relative to peers will decline due to falling iron ore prices.
- AKS -1.1%, NUE -0.1%, STLD -1.2%, RS -0.3%, SCHN -1%.
Jul. 11, 2014, 4:32 PM
- U.S. Steel (X +3.2%) and other steel stocks surged near the close after the U.S. Commerce Department set duties of up to 15.75% on steel pipe from South Korean and eight other countries used in the oil and natural gas industry.
- The action reverses an earlier decision after the U.S. steel industry filed a complaint that it was being hurt by unfair competition from overseas.
- AKS +0.6%, NUE -0.5%, STLD +1.2%, RS +0.4%, SCHN +2%.
Jun. 19, 2014, 7:50 PM
- AK Steel (AKS) -3.9% AH forecasts a Q2 earnings loss of $0.02 to $0.06 per share vs. the analyst consensus estimate for a $0.10 gain.
- AKS says that, while it generally has seen improved conditions in the steel markets it serves, Q2 results will be hurt by lingering effects of extreme winter weather conditions and mark-to-market hedging losses, which it expects will be substantially offset in H2 2014 by lower costs for commodities or by gains in its hedging positions.
Jun. 16, 2014, 9:10 AM
- AK Steel (AKS) +5.1% premarket after BofA/Merrill upgrades shares to Buy from Neutral with a $10 price target, up from $9, citing better global electrical steel demand, falling iron ore costs which should start to benefit AKS in Q3, and an improving free cash flow story into 2015.
- The firm says AKS is the only beneficiary of lower iron ore prices in its coverage universe, as AKS still relies on third party iron ore for half its needs even with the Magnetation investment.
- AK operations should be back to normal by Q3 with the return of its Ashland, Ky., furnace in late Q1 and after playing catchup with customers, BofA ads.
Jun. 4, 2014, 2:39 PM
- A bullish outlook on steel released in Japan by Credit Suisse could be moving sector stocks in the U.S., Barron's Ben Levisohn writes, even though conditions for the U.S. industry don't look especially promising.
- U.S. Steel (X +3.9%) is enjoying its biggest one-day percentage gain since Dec. 23; some sources cite news of its idling two plants in Texas and Pennsylvania that produce tubular products for the oil and gas industries, but that was announced two days ago.
- Suggesting investors tread lightly on steel stocks, Wells Fargo analysts expect steel imports to remain at elevated levels as domestic vs. international price spreads are more than $100/ton across all flat and long products; imports typically increase when U.S. pricing is at a greater than $100 premium.
- Also: AKS +3.4%, SCHN +1.7%, CMC +0.8%, STLD +0.3%, NUE -0.2%.
May 14, 2014, 10:46 AM
- U.S. steel imports (SLX) are approaching record levels, prompting calls for new import tariffs as well as the highest number of trade complaints in more than a decade, as a recent increase in China's steel exports heightens the tension.
- The surge in imports reflects oversupply abroad, which has cut prices, and strong U.S. demand spurred by energy drillers and a resurgent auto industry.
- A wave of U.S. trade rulings is expected this summer, but officials so far have refused to impose new tariffs on products used in drilling for oil and natural gas, which doesn't please Sen. Sherrod Brown of Ohio, who says operators of U.S. mills such as U.S. Steel (X), AK Steel (AKS) and ArcelorMittal (MT) should accept slightly higher prices for domestic steel.
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