Nucor (NUE) (STLD) (MON) (RIO) (POT) (CLF) Ratings, Price Targets

Nucor (NYSE:NUE), Steel Dynamics (NASDAQ:STLD), Monsanto (NYSE:MON), Rio Tinto (NYSE:RIO), Potash (NYSE:POT) and Cliffs Natural Resources (NYSE:CLF) ratings and price targets.

Nucor (NUE) was downgraded by Deutsche Bank (NYSE:DB) from a "Buy" rating to a "Hold" rating.

Steel Dynamics (STLD) was downgraded by Crédit Agricole from a "Buy" rating to an "Outperform" rating.

Macquarie initiated coverage on Monsanto (MON). They have a "Neutral" rating on the company.

Barclays (NYSE:BCS) initiated coverage on Rio Tinto (RIO). They have an "Equal Weight" rating on the company.

Potash (POT) was upgraded by National Bank from an "Underperform" rating to a "Sector Perform" rating.

Cliffs Natural Resources (CLF) was downgraded from an "Outperform" rating to a "Neutral" rating.

Steelmakers (X) (AKS) (NUE) (STLD) Enter Summer Positive

In America Memorial Day weekends heralds the unofficial start of summer, and steelmakers ended May on an up note, as shares of US Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) all closed up Friday.

Apparently investors has decided to take the chance the recent boost in prices by steelmakers is sustainable, as the industry responds to price declines in prices in the North American market.

For flat-rolled steel, prices slid form a high of $800 a ton to about $780 a ton since April. Some of this is the result of supply-chain shortage that seem to have been worked through now.

The drop in prices resulted in Nucor, AK Steel and Steverstal boosting prices by close to $40 a ton.

With demand remaining weak, it's questionable by analysts whether the increase in prices will be able to hold. Industry capacity utilization at this time is only about 75 percent, a very average number.

Results in the second quarter should continue to be strong for steelmakers, but heading into the third quarter higher prices of scrap metal, coking coal and iron ore, along with an anemic so-called economic recovery, has generated concerns as to the strength of the industry.

For the next five years analysts see growth for the steel industry only at about a 5 percent rate at highers, with many thinking it'll be lower than that.

US Steel closed Friday at $45.67, gaining $0.33, or 0.73 percent. AK Steel closed at $15.29, rising $0.25, or 1.66 percent. Nucor ended at $42.09, jumping $0.20, or 0.48 percent. Steel Dynamics closed at $17.02, climbing $0.23, or 1.37 percent.

Nucor (NYSE:NUE), AK Steel (NYSE:AKS), Commercial Metals (NYSE:CMC) Rise on Collapsing US Dollar, Fed Inflation

Nucor (NYSE:NUE), AK Steel Holding (NYSE:AKS), Commercial Metals Company (NYSE:CMC) all moved up with the broader commodity sector Thursday, as the announcement that the Federal Reserve was going to inflate again via its quantitative easing strategy pushed up the price of commodities in anticipation of the inevitable inflation to come.

Commodity prices going up included gold, silver, oil prices and aluminum. Gold prices reached record levels again, straining toward the $1,400 an ounce level. Silver surged past the $26 level, and seems poised to continue moving up.

The steel industry could go through a period of fluctuation as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the wide swings in currency value and the battle by some against the Chinese renminbi, which they'll have to take defensive measures against.

Because of market factors, and the overall health of the steel industry, it probably won't participate in the surge in commodity prices and demand as other raw materials will do.

Nucor closed at $39.40 Thursday, rising $0.86, or 2.23 percent. AK Steel Holding surged to close at $13.55, gaining $0.29, or 2.19 percent. Commercial Metals Company was up to $14.59 at the end of the trading session, gaining $0.54, or 3.84 percent.

UBS (NYSE:UBS) Places US Steel (NYSE:X) on Short Term Buy List

Saying they expect steel prices to rise, UBS (NYSE:UBS) added US Steel (NYSE:X) to their Short Term Buy list.

"We put a Short-term Buy rating on U.S. Steel on the back of our conviction that steel prices are about to rise. We think it is a beneficiary, with Buy-rated Steel Dynamics (Nasdaq:STLD), because it has captive iron ore in the U.S. and can see margins improve when price hikes stick. We forecast HRC at $650 for 2011, up from recent spot at $520-$560. We think Nucor (NYSE:NUE) may underperform peers given it has less captive raw materials."

Having its own iron ore resources generates a competitive advantage for US Steel, which should enjoy stronger margins and earnings for the quarter.

UBS maintains their "Neutral" rating on US Steel. The steel producer closed Tuesday at $44.85, gaining $1.56, or 3.60 percent. UBS increased their price target from $42 to $43.

Citigroup (NYSE:C) Lowers Price Target on Nucor (NYSE:NUE)

After missing analysts' expectations, Citigroup (NYSE:C) lowered its price target on Nucor Corp. (NYSE:NUE), while maintaining a "Buy" rating on them.

Citigroup said in a note to clients, "Based on recent results, NUE's qualitative guidance and modeling losses for the company's downstream Steel Products business into 2011, we are lowering our 2010 estimate to $0.61 from $0.78, 2011 to $2.85 from $3.70 and 2012 to $3.80 from $4.30. Based on these changes we are lowering our target price to $53 from $57 but maintaining our Buy...rating.

"NUE expects market conditions to be challenging in 4Q as limited construction activity and newly introduced US steel capacity enters an already competitive market. 3Q demand patterns diverged for long and flat products as structural and bar mill products increased sales volumes sequentially while plate and sheet declined. Similar to comments from STLD earlier this week, the near-term outlook for long-products looks better than flat-rolled.

"While we have slashed our earnings outlook materially, we believe NUE shares are undervalued relative to their mid-cycle earnings potential that is closer to $4.50/sh. Near-term demand indicators remain weak for the remainder of 2010, but we see signs of a construction rebound in 2011 that should lift demand for NUE's long products and stem losses at Steel Products by 2H11."

With continuing uncertainties connected to the weak global economy, Nucor said the fourth quarter may be the most challenging of the year.

Nucor closed Friday at $37.88, dropping $0.01, or 0.03 percent.

POSCO (NYSE:PKX), US Steel (NYSE:X), Nucor (NYSE:NUE), Reliance (NYSE:RS) on UBS' (NYSE:UBS) Outlook for Industry

Citing soft flat-rolled volumes, UBS (NYSE:UBS) said Commercial Metals Company (NYSE:CMC) and United States Steel Corp. (NYSE:X) could miss earnings, pushing the entire sector down Tuesday.

Even more dramatic was the downwardly revised full-year profit estimate of POSCO (NYSE:PKX), which was slashed by 7 percent. Slowing demand and higher costs were the reasons given for the changes.

The one positive note was Schnitzer Steel Industries Inc. (NASDAQ:SCHN), which UBS said could generate better results in the third quarter than thought.

The Market Vectors Steel ETF (NYSE:SLX) closed at $64.88, losing $0.67, or 1.02 percent.

Reliance Steel & Aluminum closed Tuesday at $43.24, down $0.33, or 0.76 percent. Nucor Corp. (NYSE:NUE) finished the session at $39.88, losing $0.20, or 0.50 percent. AK Steel Holding Corp. (NYSE:AKS) dropped to $14.50, a loss of $0.14, or 0.96 percent.

Posco plummeted to $114.47, falling $5.03, or 4.21 percent. Schnitzer Steel Industries Inc. fell to an even $50, a slight loss of $0.03, or 0.06 percent. Commercial Metals Company was also off just a little, ending at $14.76, dropping $0.06, or 0.40 percent.

The steel industry overall is in for a rough ride as news continues to confirm demand is slowing.

US Steel (NYSE:X), Steel Dynamics (Nasdaq:STLD, Nucor (NYSE:NUE) Downgraded by Longbow

The steel industry continues to be out of favor, and Longbow Research reflectd that with their downgrades of U.S. Steel (NYSE:X), Steel Dynamics (Nasdaq:STLD and Nucor (NYSE:NUE), although MF Global (NYSE:MF) did upgrade Arcelor Mittal (MT) from "Neutral" to "Buy" in the sector.

US Steel was downgraded from "Buy" to "Neutral," with a price target of $60 kept in place; Steel Dynamics was downgraded from "Buy" to "Neutral," with Longbow keeping a price target of $20 on the company; Nucor was dropped from "Neutral" to "Sell."

Steel prices are expected to remain under pressure for some time, and competition in certain segments like flat roll mill will continue to challenge a number of the steel producers.

Goldman Sachs (NYSE:GS) also downgraded several steel producers recently, including U.S. Steel and Nucor.

Nucor (NYSE:NUE), Steel Dynamics (Nasdaq:STLD) Lower Third-quarter Guidance

With Nucor (NYSE:NUE) and Steel Dynamics (Nasdaq:STLD) lowering their third-quarter guidance, Canaccord Genuity said it confirms the domestic steel scrap market, in relationship to flows and spreads, is slowing down for the quarter.

"Both Nucor and Steel Dynamics lowered their Q3 earnings guidance on Tuesday. For the record, Nucor expects Q3 earnings per share to be $0.05-$0.10, down from $0.29 in Q2/10. Steel Dynamics forecasts Q3 EPS of $0.05-$0.10, down from $0.22 in Q2/10," said Canaccord.

Neither Nucor or Steel Dynamics is rated at this time by Canaccord.

"This commentary confirms what we have been hearing about the domestic scrap market in the current quarter in terms of flows and spreads. As detailed in prior research, we recently lowered our Aug. (FQ4/10) quarter estimate for Schnitzer Steel (Nasdaq:SCHN), based on reduced expectations for average realized metal spreads. Also, we lowered our Sims Metal Management (NYSE:SMS) estimates for F2011 and F2012 due in part to mixed ferrous scrap demand trends and weaker scrap flows."

Canaccord rates Sims and Schnitzer at "Buy."

US Steel (NYSE:X), AK Steel, (NYSE:AKS), Cliffs (NYSE:CLF) Nucor (NYSE:NUE) Rise on Pricing, Infrastructure

US Steel (NYSE:X), AK Steel Holding Corporation (NYSE:AKS), Cliffs Natural Resources Inc (NYSE:CLF) and Nucor (NYSE:NUE) are all up today on news from Arcelor Mittal (NYSE:MT) they're going to raise prices, and the possibility of getting more business from an infrastructure initiative from the White House.

Another factor was the announced shuttering of steel plants in China for a couple of weeks in order to deal with the glut of steel in the market at this time. That could give more pricing power to the steel companies.

Finally, the PMI report from China showed they were growing at a better rate than thought, and that suggests better commodity demand, including steel.

China has hinted of moving their infrastructure projects to rural areas instead of urban areas, as the property markets in urban areas are in danger of a bubble.

The one element that has proven legs in all of this is pricing power, which most steel companies will probably engage in in response to Arcelor Mittal. The rest is highly speculative and unproven, although a possibility.

U.S. Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor, (NYSE:NUE) - All Under Pressure

The steel industry is under pressure as a surplus of steel and slowing Chinese demand puts pressure on companies like U.S. Steel (NYSE:X), AK Steel (NYSE:AKS) and Nucor (NYSE:NUE).

Credit Suisse (NYSE:CS) recently said that U.S. Steel and AK Steel are particularly vulnerable to a fall in prices.

On the China part of the issue, much depends on how they continue to go forward with the cooling off of the real estate market in urban areas. At this time about growth is about 3 percent lower than before, and that definitely cuts into steel demand.

Another bit of news that has yet to be confirmed on China is they may now direct stimulus efforts to the rural areas of the country which could make up for a lot of the slowdown in urban areas. If that's the case, it could change the dynamics, although it would take time to ramp up.

On the other hand, if steel production in China start to increase again, that could offer support, although it wouldn't be anything that would push prices up dramatically, even in the best case scenario.

Even with the expected increase of steel prices in September of up to $30 a ton (probably), in the fourth quarter expectations are scrap prices will come under pressure and drop. That is based on the belief scrap steel supply will increase during that period.

The recent increase in scrap prices should also push more steel into scrap yards, which will of course bring more supply than needed, driving steel prices back down.

This could create a domino effect in other steel products and cut into margins and earnings.

Ak Steel has been cutting capacity in a low steel demand market, and U.S. Steel has a high debt load which cuts back on their flexibility and has made it extremely difficult to be profitable, as the last six quarters have shown.

On the other hand Nucor and Steel Dynamics (Nasdaq:STLD) have been able to turn a profit in slow times, and are positioned strongly to be able to at least be profitable whatever way the market turns, which should be down in the short term.

Nucor (NYSE:NUE) Earnings May be Under Pressure Going Forward

It wasn't a surprise to see a number of commodity companies like Nucor (NYSE:NUE) perform better than last year in the same quarter, and it wouldn't take much to beat that, and analysts have been holding back on their estimates, and in some cases downwardly revising them like they did with Alcoa (NYSE:AA), giving the impression they strongly outperformed, when in fact they would have underperformed if it wasn't for the revised earnings numbers right before the quarterly reports.

That wasn't necessarily the case with Nucor, but mentioned to show the last quarter was probably the last for a number companies in the metals sector, and also for Nucor, which has had three straight positive earnings quarters.

Higher prices and growing demand last quarter generated the increased earnings for Nucor, where they rose to $91 million, or 29 cents a share, a major improvement over last year's loss of $133.3 million, or 43 cents a share during the same period.

Analysts from Bloomberg had been looking for 25 cents a share, so that was a nice performance. Sales were also up to $4.2 billion, a huge surge of 69 percent.

Mills ran at 71 percent of capacity for the quarter, according to CEO Dan DiMicco, whereas last year they ran at an anemic 46 percent. Prices were also up 25 percent, while they shipped 53 percent more steel than a year earlier.

Even so, as it looks like will happen in the metals sector in general this quarter, Nucor said in a statement that earnings will be challenging going forward. “There is a general slowdown taking place across all product lines as the overall economy has entered into a new period of uncertainty. This is the case both in the U.S. and globally,” said the company.

Like other metals, steel prices have dropped since June, and demand from China has fallen as they deal with a hot property market they're battling.

Some analysts see the next quarter as being level at its best, and quite possibly an earnings loss.

It's actually good to hear one of the commodity companies admitting things are slowing down, as a number have given guidance as to increased demand and prices, which the current economic conditions make look like a stretch at best.

US Steel (NYSE:X), Arcelor Mittal (NYSE:MT), Nucor (NYSE:NUE) Coming Under Pressure?

The announcement by Nucor (NYSE:NUE) today that was lowering its earnings guidance today didn't seem to have much impact on the steel industry, as companies like US Steel (NYSE:X), Arcelor Mittal (NYSE:MT) and Nucor (NYSE:NUE) were all up on the day.

But news that steel production is outpacing demand over the last month or so has put downward pressure on margins, and ultimately profits.

Nucor in particular said their decrease in demand came from residential and non-residential segments, driving down the earnings the company had originally projected.

Other countries like India has stated similar things in that the supply is higher than demand now, and their steel companies have had to sell at lower prices to move product.

This could put pressure on others like Arcelor Mittal and US Steel, along with most steel companies until the situation is mitigated.

Specialty steelmakers could do better depending on what their products are.

Nucor (NUE) Gives Guidance Warning on Profits for Second Quarter

Nucor (NYSE:NUE) had bad news for its shareholders today, as they adjusted their guidance downward for earnings in the second quarter, based on slowing demand for their products.

With analysts looking for 34 cents a share, it's an attempt to manage expectations so the stock doesn't get clobbered because of the downwardly revised earnings of 20 cents to 25 cents a share the company now looks for.

Last year for the same quarter, Nucor reached earnings of 10 cents a share.

"As expected, the most challenging markets for our products continue to be those associated with residential and non-residential construction, which continue to show little, if any, strength," Nucor said in a statement. "This is particularly true for our downstream businesses."

Nucor was level most the day, as the market took the news relatively calmly, but that is sure to change once the word gets out more.

US Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE), Arcelor Mittal (NYSE:MT) Crushed Last Week

Steel stocks took a beating all week, as US Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and Arcelor Mittal (NYSE:MT) stock charts all looked like you were going down a mountain. One exception was Gerdau S.A. (NYSE:GGB), which while losing share price during the week, wasn't as pronounced as the others.

All of this is based on the economic sovereign debt crisis in Europe, as well as the belt tightening of China, which will result in lowered demand for steel, and is also lowering the price of iron ore.

US Steel is particularly exposed to Europe, which could cause them problems in the long run, as that's a challenge that isn't going to go away any time soon.

US Steel finished the week at $41.99, down Friday by $3.29, or 7.27 percent.

The week for AK Steel ended at $13.34 a share, down on Friday by $1.14, or 7.87 percent.

Nucor ended the last five trading days at $40.93, dropping on Friday by $1.61, or 3.78 percent.

For Arcelor Mittal, they came in at $27.50 for the end of the week, plunging on Friday by $1.63, or 5.60 percent.

Gerdau S.A. finished the trading week at $13.01, down $0.64 on the day, or 4.69 percent.

With this precipitous weekly drop in steel stocks, there is sure to be a rebound based on that and nothing else, the reason why some say they like the stocks now.

That's primarily based on current valuations and not related to fundamentals and the macro-economic realities they're facing.

Long-term the steel industry and companies heavily exposed to it should struggle, especially those with heavy exposure to Europe, which is guaranteed to be a slow economy for some time to come, if not poised to go back into a recession, if they're not already there.

China's different only in the clarity isn't there yet as to how the austerity measures they're taking will impact the steel and other industries.

While China will no doubt continue to grow, it won't be at the 12 percent or higher rates it has been in the recent past. More than likely it'll start to come down to a more reasonable 7 to 8 percent rate in the near term.

With the U.S. economy about level at this time, and the combination of Europe and China, it'll have a dramatic impact on the commodity sector in general, and steel industry specifically.

Freeport-McMorRan (NYSE:FCX) Cliff Natural Resources (NYSE:CLF) Nucor (NYSE:NUE) Top Citigroup (NYSE:C) Picks

Citigroup (NYSE:C) analyst Brian Yu revealed his top picks today, the metals stocks leading the way. In the preferred order of his picks were Freeport-McMorRan (NYSE:FCX) Cliff Natural Resources (NYSE:CLF) Nucor (NYSE:NUE) and AK Steel (NYSE:AKS), the latter of which he upgraded to a "Buy."

Yu asserts the 26 percent correction in metal stocks is excessive, as was the correction in AK Steel; the reason he upgraded it today.

If the fears of a double-dip recession becomes a reality, the least exposed companies of those above, in Yu's view, are Freeport-McMorRan and Nucor.

Freeport-McMorRan, Nucor, AK Steel and Cliff Natural Resources all finished the day up.

Nucor (NYSE:NUE) Acquiring Companies, Own Shares

Nucor (NYSE:NUE) seems to be getting on surer footing in a tough steel market, as residential and non-residential construction markets continue to be tough.

Expansion through acquisition and acquiring shares in their own company has been much of the focus recently, as they prepare for what they hope is an upswing in the steel market.

Nucor has increased production at their steel mills from last year, and is looking for an even better quarter than the the first quarter.

Along with competitor Gerdau Ameristeel (NYSE:GNA) (TSE:GNA), they've also commited to keeping prices for wide-flange steel beams where they're at now, as they want to continue the industry on a more even keel, after several years of extreme challenges.

Nucor (NYSE:NUE) CEO New AISI Head

The American Iron and Steel Institute (AISI) board of directors has named Nucor (NYSE:NUE) Chairman,CEO and President Daniel R. DiMicco as chairman of the institution, which will extend through May 2011.

DiMicco replaces James L. Wainscott, Chairman, CEO and President of AK Steel (NYSE:AKS), whose term just expired.

Insiders view this as a change in direction for the organization, which is becoming more policy driven to give the steel industry in North America a stronger global voice.

DiMicco is considered one of the stronger voices in the steel industry.

Nucor (NYSE:NUE) CEO Concerned with Steel Overcapacity

The CEO of Nucor (NYSE:NUE), Dan DiMicco, said recently he has concerns over Severstal, US Steel (NYSE:X) and ArcelorMittal (AMS:MT) (NYSE:MT), as they restart blast furnances in the US which will add approximately 8 million short tons of capacity to the market.

DiMicco stated, “We have serious concerns that capacity being brought back will get ahead of the demand in the marketplace because the economy isn’t really growing, we are not creating jobs. We are not seeing a lot of commercial construction, nonresidential construction, so it’s a concern. And it should be a concern for everybody. And anybody that says it’s not an issue is kidding themselves or trying to kid you.”

The result of all this, if it happens, will be the drop in steel prices which would put pressure on earnings of steel companies.

U.S. Steel (NYSE:N), Nucor (NYSE:NUE), AK Steel (NYSE:AKS) and Steel Dynamics (NASDAQ:STLD) Rise On Improved Production

World Steel Association Report

Major steelmakers made big moves as data released Tuesday revealed demand for steel products has resulted in increased production and capacity rates at companies like U.S. Steel (NYSE:N), Nucor (NYSE:NUE), AK Steel (NYSE:AKS) and Steel Dynamics (NASDAQ:STLD).

Data from the World Steel Association showed operating rates at steel plants were their highest since September 2008, while worldwide steel production increased 24.2 percent from February 2009.

Output for crude steel surged by 51.3 percent to just under 6 million tons in February as well.

Utilization is expected to average far above 2009 levels, which were at 62.8 percent in the fourth quarter of 2009, increasing to an average between 70 percent to 75 percent, said the report.

Predictably the news sent stocks of steelmaker surging.

Nucor (NYSE:NUE) Raising SBQ Prices

Nucor Corporation Raising Special Bar Quality Prices

Nucor Corporation (NYSE:NUE) communicated to its customers on Thursday they will be increasing the price of special bar quality (SBQ) products by $30 a ton starting with shipments leaving May 1.

Other companies have made similar announcements this week, with some products going as high as $40 a ton, such as alloy heat-treated and quench-and-tempered cold-finished bars produced by Gerdau Macsteel.

Demand has been largely the reason behind the increased prices, along with low supply. Another factor is the higher cost of raw materials to produce the various products.