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, 4:40 PM
- Steel Dynamics (NASDAQ:STLD) +2.4% AH after guiding Q3 EPS of $0.42-$0.46, substantially above Q2 results and ahead of analyst consensus estimate of $0.38, as STLD expects shipments and metal spreads to improve across the steel operating platform despite continued elevated import activity.
- STLD says demand trends for key steel-consuming end markets is expected to remain favorable, as strength in automotive, manufacturing, energy and construction markets continues to improve.
- The strong guidance follows optimistic outlooks from U.S. Steel (NYSE:X) and Nucor (NYSE:NUE).
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. 15, 2014, 8:49 AM
- Nucor (NYSE:NUE) agrees to acquire the Gallatin Steel business from ArcelorMittal (NYSE:MT) and Gerdau (NYSE:GGB) for ~$770M.
- NUE says adding the Gallatin flat-rolled products mill in Kentucky, with an annual capacity of ~1.8M tons, will broaden its footprint in the U.S. midwest and will increase its total flat-rolled product annual capacity by 16% to ~13M tons.
- NUE expects the deal to be immediately accretive to cash flow and accretive to earnings after working through purchase accounting-valued finished goods inventories.
- MT and GGB each owned 50% interests in Gallatin.
- NUE +0.9%, MT -0.5% premarket.
Sep. 10, 2014, 6:50 PM
Sep. 10, 2014, 2:34 PM
- The U.S. Commerce Department has announced that Turkey has not been dumping rebar and will not impose duties on it, and Axiom Capital thinks it is bad news for U.S. Steel (X -0.7%).
- Axiom says it is difficult to imagine U.S. steel mills successfully arguing that dumping is occurring against the current macro backdrop when U.S. HRC spot prices are sitting at a $93, $63 and $18 premium to Chinese, EU and Turkey HRC spot prices.
- The firm continues to believe the rally in U.S. Steel is based several misconceptions by the market (earlier).
- A group of five U.S.-based steel producers, including Nucor (NUE -0.9%) and Commercial Metals (CMC -2%), sued last year, accusing Turkey and Mexico of essentially undercutting U.S. prices to grab sales and market share; the U.S. confirmed duties on Mexican material of up to 66.7%.
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.
Sep. 3, 2014, 7:43 AM
- The U.S. Department of Commerce has set preliminary duties of up to 110% on imports of carbon and alloy steel wire rods from China following a ruling that found the products being sold below cost in the U.S.
- The complaint regarding the imports, which totaled $313M in 2013, was made by several firms including ArcelorMittal (NYSE:MT), Keystone Consolidated (OTC:KYCN) and Nucor (NYSE:NUE).
- A final decision by the Department of Commerce is due by Nov. 12. The U.S. International Trade Commission will make its final decision in December.
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. 24, 2014, 9:01 AM
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. 20, 2014, 12:49 PM
- Expected Q2 EPS of $0.35-$0.40 is an increase from $0.27 a year ago, but the low end of the company's previously reported expectations.
- "Overall operating performance at our steel mills segment is expected to be slightly improved compared to Q1, as improvements in sheet and plate profitability are partially offset by lower profitability in structural steel," says Nucor (NUE -1.7%). "Steel demand continues to be strong, particularly for sheet and plate products."
- Source: Press release
Jun. 5, 2014, 9:17 AM
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%.
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