Tue, Apr. 14, 3:23 PM
- Despite his expectation of continued low steel prices, Clarkson Capital's Lee McMillan launches coverage on several steel makers with Buy recommendations for Arcelor Mittal (MT +5.2%), AK Steel (AKS +4.6%) and Nucor (NUE +0.7%) based on their exposure to the U.S. automotive and construction industries.
- Steel makers that rely on the oil and gas industry, which typically accounts for 10% of U.S. steel demand, likely will be in a rut for a while; U.S. Steel (X +3.9%) ranks a Sell rating for its high fixed costs and reliance on the U.S. energy sector, McMillan says.
- Rated Hold are Commercial Metals (CMC +0.8%), Reliance Steel (RS -1.9%) and Steel Dynamics (STLD +1.9%).
- U.S. steel producers are likely to file dumping charges against China following the release of their Q1 results, but imports will continue to depress U.S. steel prices, the analyst predicts.
Tue, Mar. 31, 10:16 AM
- J.P. Morgan tells clients to short U.S. Steel (X -2.7%), expecting the company to operate at a loss this year.
- JPM cuts its estimated FY 2015 EPS for the company to a loss of $0.25 from its earlier outlook for a $1.57 gain, and sees FY 2016 EPS of $1.42 vs. its earlier view for $3.00.
- The firm believes a strong dollar, weak oil prices and slowing growth in China will weigh on metals demand.
- Also: AKS -3.6%, NUE -1.3%, STLD -2.1%, WOR -3%, CLF -3.9%, CMC -1.8%, TMST -3.9%, SCHN -1.9%.
- Earlier: U.S. Steel to idle Minnesota plant
Fri, Mar. 27, 5:52 PM
- It's just a matter of time before U.S. steel companies such as Nucor (NYSE:NUE), U.S. Steel (NYSE:X) and Steel Dynamics (NASDAQ:STLD) seek tariffs on imports, Credit Suisse analysts say.
- Recent plant closures by U.S. Steel and this week’s State of Steel meetings in D.C. "look like a convenient prelude to the filing of a steel trade case," the firm says, adding that one of the first steps is the demonstration of injury.
- Steel businesses which are most vulnerable to imports will be those most active in trade cases, Credit Suisse says; U.S. Steel is a high fixed-cost business, for which pricing losses translate almost directly into earnings loss.
- For investors, the firm prefers X for “the longer term potential of its asset base under a revised operating regime,” and worries about NUE due to its valuation premium relative to STLD.
Fri, Mar. 20, 2:39 PM
- AK Steel (AKS -5.2%) is sharply lower after reporting downside Q1 guidance, citing lower than expected carbon steel spot market shipments and prices due to high levels of what it sees as unfairly traded imports, but most other steel names sport nice gains: X +4.3%, MT +2.9%, NUE +2.8%, STLD +1.9%, WOR +2.5%, CMC +2.3%.
- Various factors but especially the strong dollar are sparking a surge in steel imports, resulting in a tough Q1 for all U.S. steel producers, but most of the companies also say Q2 and H2 2015 should be a bit better as demand is fairly strong in many end markets (Briefing.com).
- NUE said this week that steel mill margins for all products should improve in Q2 as it begins to realize the benefits of lower raw materials costs and selling prices begin to stabilize, while STLD said continued strength in domestic steel consumption from the auto, manufacturing and construction sectors should support a stronger Q2 and H2.
- Credit Suisse analysts prefer US Steel in the group "with the caveat that this is a 1-3 year view."
Thu, Mar. 19, 9:19 AM
- Nucor (NYSE:NUE) -3.1% premarket after cutting its Q1 earnings guidance, now seeing EPS of $0.10-$0.15 vs. $0.40 analyst consensus and its earlier outlook for slightly exceeding Q1 2014's $0.35.
- NUE expects overall Q1 operating performance at the steel mills segment to decrease significantly Q/Q due to lower selling prices and margins resulting from "the exceptionally high level of imports flooding the domestic market."
- NUE says total imports increased 38% Y/Y in 2014, with imports accounting for 34% of total domestic shipments in 2014, and import levels gained momentum throughout 2014 with H2 imports 10% higher than H1; the trend has continued in 2015, with January total imports accounting for 39% of total January domestic shipments.
- Steel Dynamics (NASDAQ:STLD) guided below consensus after the close on Tuesday.
Mon, Mar. 16, 5:19 PM
- Steel stocks (NYSEARCA:SLX) finished mostly lower after a WSJ weekend report on increasing Chinese steel exports and an analyst note that lowered price targets on the sector.
- WSJ said China's steel exports rose 63% Y/Y to 9.2M tons in January, and that as China's growth slows it is shipping its excess steel overseas, resulting in lower prices and prompting steel producers all over the world to seek government protection.
- Also, Jefferies cut price targets on several sector names after what it sees as a challenging Q1, noted that most of its contacts expect steel prices to trough sometime in Q2, and said it believes mini-mill producers such as Steel Dynamics and Nucor are best positioned in the group.
- In today's trade, X +0.7%, NUE +1.1%, STLD +0.1%, AKS -1.5%, WOR -2.3%, CMC -3%, SCHN -4.7%.
Thu, Feb. 26, 5:27 PM
- U.S. steelmakers are slashing prices to cope with a flood of imports juiced by the strong dollar, a move that will pressure their profit margins and reduce costs for buyers of steel, WSJ reports.
- Imports rose 33% Y/Y in January, according to new figures from the American Iron and Steel Institute, reaching 3.85M tons vs. 2.9M a year earlier; to stem the tide, steelmakers with major U.S. operations such as ArcelorMittal (NYSE:MT), U.S. Steel (NYSE:X) and Nucor (NYSE:NUE) have cut prices in recent weeks, according to steel distributors who buy from them.
- The benchmark hot-rolled coil index is down 17% YTD to ~$500/ton, its lowest level since August 2009.
- The lower steel prices are good news for makers of cars and car parts, construction companies and other major buyers of steel (NYSEARCA:SLX).
Tue, Feb. 17, 3:17 PM
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, 9:58 AM
- Nucor (NUE -1.4%) opens lower even after Q4 earnings of $0.68 came in above last month's company guidance of $0.53-$0.58/share; both the $0.68 and the guidance exclude a $0.03 charge related to a partial asset writedown.
- NUE says Q4 average selling prices rose 1% and total steel mills shipments rose 2%.
- NUE expects Q1 earnings will decrease from Q4 to a level slightly exceeding Q1 2014, with market conditions in the steel mills segment impacted by challenges in energy markets due to customer inventory reductions caused by lower oil prices; expects improvement in energy demand once inventory destocking is complete.
- Says production at the Louisiana operation remains suspended amid repairs, and adds that the business will notbe operational until late in the current quarter.
Tue, Jan. 27, 9:06 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
Thu, Jan. 15, 3:59 PM
- Barclays is bullish on steel producers thanks to improving U.S. steel demand that should offset the downward trend in steel pricing, neutral on copper miners as lower than expected metal supply will outweigh a slowdown in Chinese consumption growth, and cautious on coal as low nat gas prices along with growing utility regulations and slowing Chinese demand for imported coal will hurt demand.
- In steel, the firm's Overweight-rated steel stocks Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) stand to gain from steel consumption growth from the U.S. construction, manufacturing and automotive industries while offering little direct exposure to the troubled energy sector.
- In copper, both Southern Copper (NYSE:SCCO) and Freeport McMoRan (NYSE:FCX) boast high-probability mining expansion projects over the next two years, but Barclays considers pure-play SCCO's overall risk profile more favorable.
- In coal, Cloud Peak (NYSE:CLD) offers a relatively healthy balance sheet and reasonable valuation on realistic pricing, while Alpha Natural (NYSE:ANR) and Arch Coal (NYSE:ACI) struggle under heavy debt from ill-timed acquisitions exacerbated by very slim profitability.
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