Canaccord commented on the overall sector Schnitzer Steel (NASDAQ:SCHN) and Sims Metal Management (NYSE:SMS) operate in, and said in the short term there isn't much to get excited about, as little is out there that would suggest the ongoing drop in ferrous scrap prices will halt any time soon.
"Based on our research, we conclude the export market remains in a temporary lull following a fairly strong month in August. Overseas demand is relatively sluggish for the most part and ferrous scrap prices are on the decline (perhaps more so than we expected earlier this week). Although a lack of near-term catalysts is likely to keep Schnitzer and Sims Metal Management (NYSE:SMS) in a trading range for now, in our view, we maintain our BUY ratings based on attractive valuations and compelling long-term growth drivers," said Canaccord.
Both companies have had their shares drop from a year ago, as had most in the steel industry.
It's all about demand and it just isn't there, and likely won't be for some time.
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