Steel Distributors Are Able to Pass Price Through Without Too Much Exposure to Commodity Pricing: An Expert Steel Analyst Interviews with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - April 17, 2013 - The Wall Street Transcript has just published its Metals and Mining Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Precious Metals, Global Iron Ore Production, Emerging Market Infrastructure Construction, Midcap and Small-Cap Consolidation Activity

Companies include: GrafTech International Ltd. (GTI), Cliffs Natural Resources Inc. (CLF), Schnitzer Steel Industries Inc (SCHN), Steel Dynamics Inc. (STLD), Nucor Corporation (NUE), Commercial Metals Co. (CMC), United States Steel Corp. (X), AK Steel Holding Corp. (AKS), Reliance Steel & Aluminum Co. (RS), Worthington Industries, Inc. (WOR), Allegheny Technologies Inc. (ATI), RTI International Metals Inc. (RTI), Carpenter Technology Corp. (CRS), Haynes International Inc. (HAYN), Boeing Co. (BA), Companhia Siderurgica Nacional (SID) and many more.

In the following excerpt from the Metals and Mining Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Can you begin with a brief overview of your coverage universe, including some of the specific names you follow?

Mr. Viswanathan: Our coverage list is split up into a couple main categories. First off, we have the steel raw materials providers, which we are "neutral" to slightly negative on, and that would be GTI or GrafTech International (GTI), Cliffs Natural Resources (CLF) and Schnitzer Steel Industries (SCHN). Then further downstream we have the steel mills, and inside this group we have a preference for the domestic, nonresidential-levered construction names, those being Steel Dynamics (STLD), Nucor (NUE) and Commercial Metals (CMC) - which we have "buy" ratings on all three.

And then we're "neutral," with a negative bias, on the integrated steel mill companies: U.S. Steel (X) and AK Steel (AKS), largely because of their larger fixed cost base as well as raw material pressures in the case of AK, as well as exposure to some markets which we're little bit concerned on - stainless and electric in the case of AK, and tubular products in the case of U.S. Steel. Another "neutral" to negative factor for these two companies are their large legacy liabilities, those being retiree health care benefits as well as pension, both cash, expenses each year and expenses going through the income statement.

Then further downstream from the mills, we have the steel distributors. Two companies we cover there are Reliance Steel (RS) and Worthington Industries (WOR). Both of them are "buy"-rated, and this is the area where we have greatest conviction on within our coverage. Both companies should benefit in the coming years from...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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