UBS Quarterly Steel Price Update - Steel and Scrap Slightly Lower on Raw Material Inputs
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Price: $243.63 +1.31%
Rating Summary:
19 Buy, 9 Hold, 2 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
19 Buy, 9 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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UBS Quarterly Steel Price Update - Steel and Scrap Slightly Lower on Raw Material Inputs
Analyst, Shneur Z. Gershuni, said, "We updated our steel forecasts in conjunction with quarterly updates to our commodity price decks. We lifted near term forecasts for HRC steel, as price hikes moved asking prices to $740/ton; we expect mills will collect most of these hikes in H1 2012 as demand is expected to continue improving. Starting 2H12 and into ‘13, we slightly reduced our HRC steel forecast resulting from lower iron ore expectations flowing through our “cost-plus” forecasts. Mini-mills saw some modest benefit to EPS as lower scrap prices (correlated to iron ore) resulted in improved margins; X’s EPS was impacted due to captive iron and aforementioned lower iron ore forecasts; that said, our reduced ‘12e EPS remains above consensus."
"The impact of lower raw materials largely offset lower steel pricing for our coverage; Nucor (NYSE: NUE), Steel Dynamics (Nasdaq: STLD), and AK Steel (NYSE: AKS) PTs were unchanged. U.S. Steel (NYSE: X), with its captive iron ore, is the lone exception, and we lowered our PT to $33 from $34. Similarly, Cliffs Natural Resources (NYSE: CLF) estimates and PT came down due to our lower iron ore forecast."
UBS continues to favor integrated mills, X in particular, and sees modest recovery in construction which favors mini-mills like STLD and NUE.
Analyst, Shneur Z. Gershuni, said, "We updated our steel forecasts in conjunction with quarterly updates to our commodity price decks. We lifted near term forecasts for HRC steel, as price hikes moved asking prices to $740/ton; we expect mills will collect most of these hikes in H1 2012 as demand is expected to continue improving. Starting 2H12 and into ‘13, we slightly reduced our HRC steel forecast resulting from lower iron ore expectations flowing through our “cost-plus” forecasts. Mini-mills saw some modest benefit to EPS as lower scrap prices (correlated to iron ore) resulted in improved margins; X’s EPS was impacted due to captive iron and aforementioned lower iron ore forecasts; that said, our reduced ‘12e EPS remains above consensus."
"The impact of lower raw materials largely offset lower steel pricing for our coverage; Nucor (NYSE: NUE), Steel Dynamics (Nasdaq: STLD), and AK Steel (NYSE: AKS) PTs were unchanged. U.S. Steel (NYSE: X), with its captive iron ore, is the lone exception, and we lowered our PT to $33 from $34. Similarly, Cliffs Natural Resources (NYSE: CLF) estimates and PT came down due to our lower iron ore forecast."
UBS continues to favor integrated mills, X in particular, and sees modest recovery in construction which favors mini-mills like STLD and NUE.
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