Gibraltar Industries, Inc. (Nasdaq:ROCK), Harsco Corporation (NYSE:HSC) and Haynes International Inc. (Nasdaq:HAYN) all moved up with the broader commodity sector Thursday, as the reality 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 surging included aluminum, gold, silver and oil. Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver moved past the $26 mark, and is more than likely going to continue increasing for some time.
The steel industry may go through seasons of wide swings as currencies respond to the drop in value of the U.S. dollar, which will affect margins because of the wide moves in currency value and the fight by some against the Chinese renminbi, which they'll be forced to take defensive measures against.
Taking into account market factors, and the overall economic health of the steel industry in general, it probably won't partake in the surge in commodity prices and demand as other raw materials will surely do.
Gibraltar Industries, Inc. closed at $4.54 Thursday, rising $0.17, or 3.39 percent. Harsco Corporation (NYSE:HSC) surged to close at $24.03, gaining $1.59, or 7.09 percent. Haynes International Inc. was up to $15.73 at the end of the trading session, gaining $0.49, or 3.22 percent.
Showing posts with label Steel Industry. Show all posts
Showing posts with label Steel Industry. Show all posts
Friday, November 5, 2010
Metalico (AMEX:MEA), Olympic Steel (Nasdaq:ZEUS), Steel Dynamics (Nasdaq:STLD) Boosted on Fed Inflation, Collapsing US Dollar
Metalico Inc. (AMEX:MEA), Olympic Steel Inc. (Nasdaq:ZEUS), Steel Dynamics Inc. (Nasdaq:STLD) all soared with the broader commodity sector Thursday, as the fact 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 increasing included aluminum, gold, silver and oil. Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver moved past the $26 level, and is probably going to continue moving up.
The steel industry could go through seasons of swings as currencies respond to the drop 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 be forced to take defensive measures against.
Because of market factors, and the overall economic health of the steel industry in general, it probably won't partake in the surge in commodity prices and demand as other raw materials will surely do.
Metalico Inc. closed at $4.54 Thursday, rising $0.17, or 3.39 percent. Olympic Steel Inc surged to close at $24.03, gaining $1.59, or 7.09 percent. Steel Dynamics Inc. was up to $15.73 at the end of the trading session, gaining $0.49, or 3.22 percent.
Commodity prices increasing included aluminum, gold, silver and oil. Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver moved past the $26 level, and is probably going to continue moving up.
The steel industry could go through seasons of swings as currencies respond to the drop 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 be forced to take defensive measures against.
Because of market factors, and the overall economic health of the steel industry in general, it probably won't partake in the surge in commodity prices and demand as other raw materials will surely do.
Metalico Inc. closed at $4.54 Thursday, rising $0.17, or 3.39 percent. Olympic Steel Inc surged to close at $24.03, gaining $1.59, or 7.09 percent. Steel Dynamics Inc. was up to $15.73 at the end of the trading session, gaining $0.49, or 3.22 percent.
General Steel Holdings (NYSE:GSI), Gerdau S.A. (NYSE:GGB), Companhia Siderurgica Nacional (NYSE:SID) Rise on Fed Inflation, Collapsing US Dollar
General Steel Holdings (NYSE:GSI), Gerdau S.A. (NYSE:GGB) and Companhia Siderurgica Nacional (NYSE:SID) 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 aluminum, gold, silver and oil . Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver exploded past the $26 level, and is ready to continue moving up.
The steel industry could go through a seasons of swings 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 economic health of the steel industry, it probably won't partake in the surge in commodity prices and demand as other raw materials will surelydo.
General Steel Holdings closed at $39.40 Thursday, rising $0.86, or 2.23 percent. Gerdau S.A. surged to close at $13.55, gaining $0.29, or 2.19 percent. Companhia Siderurgica Nacional was up to $14.59 at the end of the trading session, gaining $0.54, or 3.84 percent.
Commodity prices going up included aluminum, gold, silver and oil . Gold prices soared record levels again, reaching toward the $1,400 an ounce level. Silver exploded past the $26 level, and is ready to continue moving up.
The steel industry could go through a seasons of swings 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 economic health of the steel industry, it probably won't partake in the surge in commodity prices and demand as other raw materials will surelydo.
General Steel Holdings closed at $39.40 Thursday, rising $0.86, or 2.23 percent. Gerdau S.A. surged to close at $13.55, gaining $0.29, or 2.19 percent. Companhia Siderurgica Nacional was up to $14.59 at the end of the trading session, gaining $0.54, or 3.84 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.
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.
ArcelorMittal (NYSE:MT), Carpenter Technology (NYSE:CRS), US Steel (NYSE:X) Soar on Collasping US Dollar, QE2
ArcelorMittal (NYSE:MT), Carpenter Technology (NYSE:CRS), US Steel (NYSE:X) 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 rising included oil prices, gold, silver and aluminum. Gold prices reached record levels again, straining toward the $1,400 an ounce level. Silver broke the $26 level, and seems poised to continue moving up.
The steel industry could go through a period of uncertainty as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the fluctuations and the battle by some against the Chinese renminbi, which they'll have to attempt to protect themselves against.
ArcelorMittal closed at $47.33 Thursday, rising $1.66, or 3.63 percent. Carpenter Technology surged to close at $35.51, gaining $0.96, or 2.78 percent. US Steel was up to $47.33 at the end of the trading session, gaining $1.66, or 3.63 percent.
Commodity prices rising included oil prices, gold, silver and aluminum. Gold prices reached record levels again, straining toward the $1,400 an ounce level. Silver broke the $26 level, and seems poised to continue moving up.
The steel industry could go through a period of uncertainty as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the fluctuations and the battle by some against the Chinese renminbi, which they'll have to attempt to protect themselves against.
ArcelorMittal closed at $47.33 Thursday, rising $1.66, or 3.63 percent. Carpenter Technology surged to close at $35.51, gaining $0.96, or 2.78 percent. US Steel was up to $47.33 at the end of the trading session, gaining $1.66, or 3.63 percent.
Schnitzer Steel (NASDAQ:SCHN), Steel Dynamics (NASDAQ:STLD), POSCO (NYSE:PKX) Soar on QE2, Collapsing US Dollar
Schnitzer Steel Industries (NASDAQ:SCHN), Steel Dynamics (NASDAQ:STLD),
POSCO (NYSE:PKX) 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 oil prices, gold, silver 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 uncertainty as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the fluctuations in currency value and the battle by some against the Chinese renminbi, which they'll have to attempt to take defensive measures against.
Schnitzer Steel Industries closed at $53.15 Thursday, rising $1.02, or 1.96 percent. Steel Dynamics surged to close at $15.73, gaining $0.49, or 3.22 percent. POSCO was up to $108.38 at the end of the trading session, gaining $3.72, or 3.55 percent.
POSCO (NYSE:PKX) 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 oil prices, gold, silver 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 uncertainty as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the fluctuations in currency value and the battle by some against the Chinese renminbi, which they'll have to attempt to take defensive measures against.
Schnitzer Steel Industries closed at $53.15 Thursday, rising $1.02, or 1.96 percent. Steel Dynamics surged to close at $15.73, gaining $0.49, or 3.22 percent. POSCO was up to $108.38 at the end of the trading session, gaining $3.72, or 3.55 percent.
Wednesday, October 27, 2010
US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal (NYSE: MT) Post Disappointing Earnings
The steel industry remains under tremendous pressure, as US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal (NYSE: MT) all reported poor results for their most recent quarter, with US Steel and AK Steel both posting losses.
Weak economies around the world are the major contributors to the terrible performance of the steel industry, as even countries with growth prospects like China are cutting back in areas to protect their economies from further erosion, especially the construction sector in China.
The consequence of China cutting back on domestic steel consumption is companies there will attempt to make up for it by exporting steel to other nations, which will continue to put downward pressure on prices, margins and earnings.
Every important metric for the industry is under pressure, as demand has fallen, sales dropped and costs risen. Many steel companies don't see this changing anytime soon.
As the global economy goes so will go the steel industry, and that doesn't bode well in an economic climate of caution and little or no growth.
US Steel lost $0.35 a share on revenue of $4.50 billion. Last year in the same quarter US Steel lost $0.17 a share. They haven't been profitable since the latter part of 2008.
ArcelorMittal's earnings dropped by 21 percent in the second quarter, but were still able to increase profits by 48 percent over the same time last year. Most of that is attributed to China demand for steel falling.
AK Steel also posted a loss for the quarter, losing $59.2 million, based mostly on the increase in iron ore prices.
Weak economies around the world are the major contributors to the terrible performance of the steel industry, as even countries with growth prospects like China are cutting back in areas to protect their economies from further erosion, especially the construction sector in China.
The consequence of China cutting back on domestic steel consumption is companies there will attempt to make up for it by exporting steel to other nations, which will continue to put downward pressure on prices, margins and earnings.
Every important metric for the industry is under pressure, as demand has fallen, sales dropped and costs risen. Many steel companies don't see this changing anytime soon.
As the global economy goes so will go the steel industry, and that doesn't bode well in an economic climate of caution and little or no growth.
US Steel lost $0.35 a share on revenue of $4.50 billion. Last year in the same quarter US Steel lost $0.17 a share. They haven't been profitable since the latter part of 2008.
ArcelorMittal's earnings dropped by 21 percent in the second quarter, but were still able to increase profits by 48 percent over the same time last year. Most of that is attributed to China demand for steel falling.
AK Steel also posted a loss for the quarter, losing $59.2 million, based mostly on the increase in iron ore prices.
Tuesday, October 5, 2010
Citigroup (NYSE:C) Maintains "Buy" on Cliffs Natural Resources (NYSE:CLF)
Saying Cliffs Natural Resources (NYSE:CLF) isn't getting a lot of credit for a potential turnaround in 2011, Citigroup (NYSE:CLF) visited the management recently and came away believing Cliffs still deserve the "Buy" recommendation the financial institution has on them.
CLF trades at a low 8.2x 2010E EPS which reflects little earnings contribution from troubled net assets and suggests investors give little credit for a possible 2011 turnaround. Management was confidant CLF would lift PinnOak run-rate production by 2 million tons in 4Q11 and bring cash costs down to $80/ton by investing in a new longwall, upgraded prep plant, and new shaft.
Citi said management maintains their 27 million ton North American volume guidance even though there is a low-70s utilization for the American steel industry in general.
The difference between the two offer an opportunity in exports for CLF's 5 million ton Wabush mine and materially higher operating rates for blast furnaces vs electric arc furnaces.
In China the cutback of steel hasn't affected the mid-sized customers of Cliffs.
CLF trades at a low 8.2x 2010E EPS which reflects little earnings contribution from troubled net assets and suggests investors give little credit for a possible 2011 turnaround. Management was confidant CLF would lift PinnOak run-rate production by 2 million tons in 4Q11 and bring cash costs down to $80/ton by investing in a new longwall, upgraded prep plant, and new shaft.
Citi said management maintains their 27 million ton North American volume guidance even though there is a low-70s utilization for the American steel industry in general.
The difference between the two offer an opportunity in exports for CLF's 5 million ton Wabush mine and materially higher operating rates for blast furnaces vs electric arc furnaces.
In China the cutback of steel hasn't affected the mid-sized customers of Cliffs.
Monday, October 4, 2010
POSCO (NYSE:PKX) Selling $700 Million of Global Bonds
South Korean steel giant POSCO (NYSE:PKX) announced it'll be selling close to $700 million in global bonds in October, according to company President Choi Jong Taehired.
POSCO has a rating of A at Standard & Poor’s and A- at Fitch Ratings, and A2 at Moody’s Investors Service (NYSE:MCO).
Similar to the region is resides in and ongoing geopolitical concerns, POSCO has had a rocky ride over the last year, moving up and down in wide swings, although it seems to have recovered nicely from May lows, and has been consistently moving upward in share price.
On October 1 of 2009, they stood at $100 a share even.
Friday they closed at $116.63, gaining $2.65, or 2.32 percent. They have a market cap of just under $36 billion.
POSCO has a rating of A at Standard & Poor’s and A- at Fitch Ratings, and A2 at Moody’s Investors Service (NYSE:MCO).
Similar to the region is resides in and ongoing geopolitical concerns, POSCO has had a rocky ride over the last year, moving up and down in wide swings, although it seems to have recovered nicely from May lows, and has been consistently moving upward in share price.
On October 1 of 2009, they stood at $100 a share even.
Friday they closed at $116.63, gaining $2.65, or 2.32 percent. They have a market cap of just under $36 billion.
Wednesday, September 15, 2010
AK Steel (NYSE:AKS) Plunges on Weaker Guidance
The overall steel industry is taking a big hit as companies downwardly revise their guidance in the wake of a weakening US economy. AK Steel (NYSE:AKS) joined the growing number of steel companies lowering guidance for the third quarter, and the stock price plummeted in response.
AK now expects a loss in the third quarter of $20 a ton, significantly down from the projected profits of close to $15 a ton.
Higher operating and raw material costs were cited as the reason for the lower guidance.
The steel company dropped to $13.60, falling $0.93, or 6.37 percent, as of 1:52 PM EDT.
AK now expects a loss in the third quarter of $20 a ton, significantly down from the projected profits of close to $15 a ton.
Higher operating and raw material costs were cited as the reason for the lower guidance.
The steel company dropped to $13.60, falling $0.93, or 6.37 percent, as of 1:52 PM EDT.
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."
"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."
Wednesday, September 8, 2010
Bank of America (NYSE:BAC) Recommends US Steel (NYSE:X)
The steel industry has been on a tear the last couple of days as a series of announcements has created a short-term boost to the industry, with US Steel (NYSE:X) seeming to be one of the favorites in the sector, as Bank of America (NYSE:BAC) recommended investors to buy shares in the steelmaker.
One other temporary factor which has yet to be confirmed in any way, was the rumors US Steel is a candidate for acquisition. No information was offered as to who had an interest when the rumors were circulating.
A couple other factors were ArcelorMittal's (NYSE:MT) announcement they're raising prices, China's growth rate, possible infrastructure projects domestically, and in China's rural areas as well.
The China growth aspect came from PMI numbers suggesting they're growing fast than thought in the recent past.
In the short term China has also decided to shutter its steel plants for two weeks to shrink its steel supply.
Pricing power over the next couple of months is expected to increase, making it a good play in the eyes of Bank of America.
One other temporary factor which has yet to be confirmed in any way, was the rumors US Steel is a candidate for acquisition. No information was offered as to who had an interest when the rumors were circulating.
A couple other factors were ArcelorMittal's (NYSE:MT) announcement they're raising prices, China's growth rate, possible infrastructure projects domestically, and in China's rural areas as well.
The China growth aspect came from PMI numbers suggesting they're growing fast than thought in the recent past.
In the short term China has also decided to shutter its steel plants for two weeks to shrink its steel supply.
Pricing power over the next couple of months is expected to increase, making it a good play in the eyes of Bank of America.
Monday, August 30, 2010
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.
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.
Tuesday, July 27, 2010
AK Steel (NYSE:AKS) Exceeds Estimates, but Poor Guidance
Although AK Steel (NYSE:AKS) was able to turn things around some and turn a profit in the latest quarter, exceeding analysts' expectations, their guidance wasn't inspiring, causing investors to push the price of the stock down early in the trading day, and it remains down by well over 3 percent.
Earnings for the quarter were $26.7 million, or 24 cents a share, over three times the 7 cents a share analysts expected. Last year during the same quarter AK Steel lost $47 million, or 43 cents a share.
Revenue for the quarter, similar to US Steel (NYSE:X), surged by over double what it was last year, $793.6 million, to $1.6 billion.
Like their peers, there isn't much pricing power in the steel industry at this time, and the company expects prices to fall 5 percent in the quarter. That brings projections for price per ton down from $17 that was looked for to $15.
US steel also reported challenges for the next quarter on managing operational costs.
Iron ore costs are priced in to increase by about 65 percent next quarter for AK Steel and the rest of the steel industry.
Earnings for the quarter were $26.7 million, or 24 cents a share, over three times the 7 cents a share analysts expected. Last year during the same quarter AK Steel lost $47 million, or 43 cents a share.
Revenue for the quarter, similar to US Steel (NYSE:X), surged by over double what it was last year, $793.6 million, to $1.6 billion.
Like their peers, there isn't much pricing power in the steel industry at this time, and the company expects prices to fall 5 percent in the quarter. That brings projections for price per ton down from $17 that was looked for to $15.
US steel also reported challenges for the next quarter on managing operational costs.
Iron ore costs are priced in to increase by about 65 percent next quarter for AK Steel and the rest of the steel industry.
Friday, July 23, 2010
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.
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.
Wednesday, July 7, 2010
AK Steel (NYSE:AKS) Soaring as Takeover Rumors Increase
Rumors continue to spread on the possible takeover of AK Steel (NYSE:AKS) by ThyssenKrupp.
Some have attempted to rebut the claims, but that hasn't dampened the enthusiasm of traders taking advantage of the unproven claims at this time.
What the rumor entails is ThyssenKrupp being interested in taking a 40 percent stake in AK Steel, which was sourced by a dealer, with no confirmation it is true.
As of 12:32 PM EDT the share price of AK Steel stood at $12.43, a gain of $0.91, or 7.90 percent.
Some have attempted to rebut the claims, but that hasn't dampened the enthusiasm of traders taking advantage of the unproven claims at this time.
What the rumor entails is ThyssenKrupp being interested in taking a 40 percent stake in AK Steel, which was sourced by a dealer, with no confirmation it is true.
As of 12:32 PM EDT the share price of AK Steel stood at $12.43, a gain of $0.91, or 7.90 percent.
Friday, July 2, 2010
Goldman (NYSE:GS) Lowers EPS Estimate for Schnitzer Steel (NASDAQ:SCHN)
Goldman Sachs (NYSE:GS) said in a research report that they're lowering their earnings per share estimate for Schnitzer Steel Industries (NASDAQ:SCHN), although their reiterated their "Neutral" rating on the company.
Analysts at Goldman said, “SCHN reported EPS from continuing operations of $1.43 per diluted share for its 3QFY2010 (ending May 30), above our estimate of $0.99 and the consensus estimate of $0.87. However, we expect lower scrap prices and decline in steel demand to have a significant negative impact in 4Q and are thus lowering our FY 4Q2010 estimates to $0.38 from $1.01. Our full year fiscal 2010 estimate is now $2.67, down from $2.85 earlier. We have made no changes to our FY 2011/2012/normalized estimates. Our P/E, EV/EBITDA, P/B and M&A based 6-month target price remains at $60 and we maintain our Neutral rating on SCHN.”
Concerning the long-term prospects of the company, Goldman analysts said this, “Although we maintain our Neutral rating on the stock as we see current weakness in scrap and steel prices to weigh in on the stock in the near-term, we do like the scrap fundamentals as supply is limited and demand should continue to increase as global steel production rises over coming years. Additionally emerging markets would be the main driver of incremental demand which should benefits companies like Schnitzer with coastal locations. We also like its vertically integrated model allowing the company to partially source its raw scrap from its own auto parts division.”
Goldman has a $60 price target on Schnitzer.
Analysts at Goldman said, “SCHN reported EPS from continuing operations of $1.43 per diluted share for its 3QFY2010 (ending May 30), above our estimate of $0.99 and the consensus estimate of $0.87. However, we expect lower scrap prices and decline in steel demand to have a significant negative impact in 4Q and are thus lowering our FY 4Q2010 estimates to $0.38 from $1.01. Our full year fiscal 2010 estimate is now $2.67, down from $2.85 earlier. We have made no changes to our FY 2011/2012/normalized estimates. Our P/E, EV/EBITDA, P/B and M&A based 6-month target price remains at $60 and we maintain our Neutral rating on SCHN.”
Concerning the long-term prospects of the company, Goldman analysts said this, “Although we maintain our Neutral rating on the stock as we see current weakness in scrap and steel prices to weigh in on the stock in the near-term, we do like the scrap fundamentals as supply is limited and demand should continue to increase as global steel production rises over coming years. Additionally emerging markets would be the main driver of incremental demand which should benefits companies like Schnitzer with coastal locations. We also like its vertically integrated model allowing the company to partially source its raw scrap from its own auto parts division.”
Goldman has a $60 price target on Schnitzer.
Saturday, June 5, 2010
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.
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.
Friday, June 4, 2010
AK Steel's (NYSE:AKS) Conflicting Outlook
AK Steel's (NYSE:AKS) is a good study in the broader markets, as there are conflicting views about the company based on two ways looking at the company.
There is the company itself, which pundit Jim Cramer has said is a "terrible company," while on the other side there are those looking at the macro-economic picture, which is also conflicted.
The reason for the macro-economic conflict comes from those who believe we're in a recovery and those that don't.
For those analysts who upgraded AK Steel recently, it was based upon their belief we're in the midst of a recovery, and the overall steel industry, including AK would benefit.
On the other side of the macro picture are those who are viewing the economic challenges in Europe and China which they believe will have a detrimental impact on steel demand in the near and probably long-term future.
To me there's no doubt the latter picture from the macro-economic outlook is the right one, as there is no way I can see for someone to say we're in a recovery. It doesn't line up with the data.
So if you take that away, which I believe we must, then you must look at AK Steel, or any other company for that matter, as an entity in and of itself. From that perspective there's a lot they need to do before being considered a top-level steel producer.
There is the company itself, which pundit Jim Cramer has said is a "terrible company," while on the other side there are those looking at the macro-economic picture, which is also conflicted.
The reason for the macro-economic conflict comes from those who believe we're in a recovery and those that don't.
For those analysts who upgraded AK Steel recently, it was based upon their belief we're in the midst of a recovery, and the overall steel industry, including AK would benefit.
On the other side of the macro picture are those who are viewing the economic challenges in Europe and China which they believe will have a detrimental impact on steel demand in the near and probably long-term future.
To me there's no doubt the latter picture from the macro-economic outlook is the right one, as there is no way I can see for someone to say we're in a recovery. It doesn't line up with the data.
So if you take that away, which I believe we must, then you must look at AK Steel, or any other company for that matter, as an entity in and of itself. From that perspective there's a lot they need to do before being considered a top-level steel producer.
Tuesday, May 25, 2010
Vale (NYSE:VALE), BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) and Changing Iron Ore Story
The iron ore story is of course tied into the steel story, and they're joined at the hip. The move by Vale (NYSE:VALE), BHP Billiton (NYSE:BHP) to Rio Tinto (NYSE:RTP) change the way they price iron ore as far as on a quarterly basis versus the old way of annual pricing, has shook up the industry, and China along with it, as iron ore prices skyrocketed as a result.
Frustrated over lack of desired results of negotiating prices, China has taken several steps to lower their dependence on iron ore from these three major providers.
The two major steps are to import iron ore from other countries like Iran, and to increase domestic iron ore production. In April alone, domestic iron ore production increased 50 88 million tons, a 45 percent increase over April of 2009, and a 10.5 percent increase over March.
Add to that the probable and expected decrease in raw materials in China as a consequence of rising inflation, and you have a different iron ore demand picture than was recently portrayed.
China consumes the most iron ore, accounting for 54 percent of all world consumption, and also supplies 40 percent of all iron ore in the world, leading both categories.
Even so, at this time the three major iron ore suppliers, BHP Billiton, Vale and Rio Tinto have no intention of cutting back on expansion plans or capacity, meaning they believe the demand will exceed China's ability to meet it, and they'll have to pay top dollar to attain enough iron ore to meet their needs.
Yet there is also the European sovereign debt crisis hanging over the global economy, which could significantly cut back on iron ore and steel demand as austerity measures are implemented in the region.
The conclusion is the iron ore picture isn't near as clear as it was just recently, as China is the major part of the story, and how China goes, so will go the iron ore narrative.
For the reasons stated above, iron ore prices have already dropped 20 percent since the introduction of the quarterly pricing model, and it remains to be seen how much further they drop before they find a bottom.
For the steel industry in general, they've rebounded nicely today as far as stock prices go, as the drop in iron ore prices will expand the margins, and allow them to possibly drop prices to generate more revenue and earnings.
Frustrated over lack of desired results of negotiating prices, China has taken several steps to lower their dependence on iron ore from these three major providers.
The two major steps are to import iron ore from other countries like Iran, and to increase domestic iron ore production. In April alone, domestic iron ore production increased 50 88 million tons, a 45 percent increase over April of 2009, and a 10.5 percent increase over March.
Add to that the probable and expected decrease in raw materials in China as a consequence of rising inflation, and you have a different iron ore demand picture than was recently portrayed.
China consumes the most iron ore, accounting for 54 percent of all world consumption, and also supplies 40 percent of all iron ore in the world, leading both categories.
Even so, at this time the three major iron ore suppliers, BHP Billiton, Vale and Rio Tinto have no intention of cutting back on expansion plans or capacity, meaning they believe the demand will exceed China's ability to meet it, and they'll have to pay top dollar to attain enough iron ore to meet their needs.
Yet there is also the European sovereign debt crisis hanging over the global economy, which could significantly cut back on iron ore and steel demand as austerity measures are implemented in the region.
The conclusion is the iron ore picture isn't near as clear as it was just recently, as China is the major part of the story, and how China goes, so will go the iron ore narrative.
For the reasons stated above, iron ore prices have already dropped 20 percent since the introduction of the quarterly pricing model, and it remains to be seen how much further they drop before they find a bottom.
For the steel industry in general, they've rebounded nicely today as far as stock prices go, as the drop in iron ore prices will expand the margins, and allow them to possibly drop prices to generate more revenue and earnings.
Subscribe to:
Posts (Atom)