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. 12, 2014, 2:54 PM
- Energy-related demand represents ~13% of U.S. steel sales, which Credit Suisse analysts say places most at risk US Steel’s (X -1.9%) tubular goods business, which produces OCTG products, and Commercial Metals' (CMC -3%) steel mills business, which has a significant exposure to Texas and other oil-rich regions.
- The firm also says North American iron ore producers such as Cliffs Natural Resources (CLF -3.4%) have higher energy intensities than Australian and Brazilian producers at both the mine and on the sea, and the lower oil price in theory partially closes the gap between North American and Brazilian/Australian supply, but any gains would be short-lived.
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. 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.
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%.
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%.
Sep. 18, 2013, 3:59 PM
- BMO initiates coverage of steel companies (SLX) Nucor (NUE +2.7%), Commercial Metals (CMC +2.3%), U.S. Steel (X +2.6%) and Steel Dynamics (STLD +0.9%).
- NUE, started at Outperform with a $54 price target, is arguably the best of breed, with the highest margins in the group and best balance sheet; it also has best execution and benefits from growing low-cost DRI production.
- CMC also is initiated at Outperform; it trades at the lowest valuation in the steel sector based on adjusted EV/EBITDA, dividend yield and free cash flow yield, and is leveraged to non-residential construction expected to improve over the next one or two years.
- X is started at Market Perform; its balance sheet is by far the most stretched of the group at 5x net debt to EBITDA for FY2013, and there is potential for dilution from an out-of-the-money convertible bond due in 2014.
- Earlier: STLD is started at Market Perform.
Jun. 27, 2013, 11:35 AMCommercial Metals (CMC +3.6%) climbs higher even after FQ3 missed expectations. CMC says a modest improvement in rebar shipments was more than offset by weaker shipment levels of merchant and light structural products, resulting in lower profitability at its Americas Mills business. Operationally, CMC anticipates FQ4 results similar to FQ3; consensus estimates are $0.25 EPS and $1.93B in revenues. | Comment!
Dec. 14, 2012, 2:15 PMSteel stocks show solid gains following positive China PMI data; the steel sector often is the most responsive industry to Chinese PMI data. AKS +6.7%, X +6.4%, STLD +5.1%, CMC +3.4%, MT +3.2%, NUE +3%, CMC +2.8%, RS +2.6%, SCHN +2.4%. Iron ore and metallurgical coal stocks also benefit: CLF +4.6%, WLT +3.2%, RIO +3.2%, VALE +3.1%, BHP +1.3%. | Comment!
Jan. 11, 2012, 9:14 AM
Jan. 11, 2012, 7:56 AM
Jan. 6, 2012, 2:28 PM
Jan. 6, 2012, 11:31 AM
Jan. 5, 2012, 11:13 AMCarl Icahn says he's willing to raise his $15-per-share bid for Commercial Metals (CMC -1.2%) and encourages shareholders to accept his unsolicited $1.73B tender offer for the scrap-metal processor. Icahn says if the shares are tendered and the board puts the company up for sale, he's willing to extend his offer to allow for a competitive sales process with a $15 floor. | Comment!
Jan. 4, 2012, 12:52 PM
CMC vs. ETF Alternatives
Commercial Metals Co recycles, manufactures, fabricates and distributes steel and metal products and related materials and services through a network of locations throughout the United States and internationally.
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