|Bid||3.90 x 1000|
|Ask||0.00 x 40000|
|Day's Range||4.68 - 4.84|
|52 Week Range||4.00 - 6.80|
|PE Ratio (TTM)||N/A|
|Earnings Date||Oct 25, 2018|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||5.25|
As we noted previously, China is now focusing on advanced manufacturing. After having lost the battle for low-end manufacturing to China, the United States doesn’t want to give away one of its bastions easily. In another move, the United States has imposed sanctions on the Chinese military for buying weapons systems from Russia.
China’s steel and aluminum overcapacity has earned it the ire of several countries. While formally, the country has a policy of curtailing its excess industrial capacity and has apparently taken some steps in that direction, it still has considerable overcapacity. Meanwhile, China’s Belt and Road Initiative was expected to help it tide over some of its industrial overcapacity by investing in infrastructure beyond its borders.
US steel stocks, including U.S. Steel Corporation (X) and Nucor (NUE), have whipsawed this year. At the beginning of the year, we saw some bullishness in the steel space on optimism over Section 232 tariffs. However, even as US steel prices surged to a decade high, investors stayed cold to steel stocks. Cleveland-Cliffs (CLF) has been an exception, rising 68.6% year-to-date based on its September 21 closing price.
Six Months of Tariffs: Has US Steel Industry Bounced Back? The US steel industry has seen an increase in profitability this year as President Donald Trump’s Section 232 tariffs have raised US steel prices (DIA). Nucor (NUE) and Steel Dynamics (STLD) posted record earnings in the second quarter, and earnings are expected to rise even more in the third quarter.
US steel prices have risen sharply this year as President Trump clamped down on imports by imposing a 25% tariff under Section 232 of the Trade Expansion Act of 1962. US steel prices have skyrocketed, but globally, there hasn’t been a similar uptick in prices. The net result is that the spreads between US and international steel prices widened to record highs.
Section 232 tariffs came into effect on March 23, 2018. It’s been six months, so it’s a good time to see how they’ve impacted the US steel industry. When the tariffs were first announced, there were no exemptions on a country level. However, even before the tariffs came into effect, we saw exemptions for several regions, including NAFTA (North American Free Trade Agreement) companies and the European Union.
China (FXI) became the world’s second-largest economy due to strong economic growth in the last few decades. The country saw double-digit growth a few years ago due to massive infrastructure investments and a rapidly growing export sector. According to Trading Economics, China’s economic growth averaged 9.61% between 1989 and 2018. However, the country’s economic growth has cooled off. China’s economic growth increased at an annualized pace of 6.7% in the second quarter. The US economy (SPY) grew 4.2% in the second quarter.
President Trump’s tariffs could cause US manufacturers to shuffle their supply chains. We could see some import substitution like we saw in the steel industry. However, we might also see import replacement from other emerging markets as US tariffs lead to higher landed costs for Chinese goods. Import replacement might not be as easy as it sounds. China is the dominant if not the sole supplier for many goods that it exports to the US. ...
So far in this series, we’ve discussed Nucor (NUE), Steel Dynamics (STLD), and U.S. Steel Corporation’s (X) third-quarter earnings guidance. In this part, we’ll see how things look for AK Steel (AKS) in the third quarter and beyond. AK Steel has underperformed the broader steel space (XME) in 2018. The stock saw a selling spree after its first and second-quarter earnings release. In the second quarter, AK Steel missed the consensus estimates and its third-quarter guidance also spooked the markets. Let’s see what analysts project for the company’s third-quarter earnings.
Have President Trump’s Tactics Started to Yield Results? On September 17, President Trump imposed 10% tariffs on $200 billion worth of goods from China. The tariffs will increase to 25% by the end of 2018.
U.S. Steel Corporation (X) is having a dismal run in 2018. The stock has lost 15.3% year-to-date based on the closing prices on September 18. AK Steel (AKS) has lost 17.3% YTD, while Nucor (NUE) has risen 2.3%. Cleveland-Cliffs (CLF) has outperformed US steel stocks (XME) in 2018 with gains of 69.2%. Let’s see what could drive U.S. Steel Corporation’s performance in 2019.
How far off is AK Steel Holding Corporation (NYSE:AKS) from its intrinsic value? Using the most recent financial data, I am going to take a look at whether the stockRead More...
Nucor (NUE), the largest US-based steel producer, posted its highest second-quarter earnings ever in the second quarter of 2018. Steel Dynamics (STLD) also posted record earnings in the second quarter. The Section 232 tariffs lifted US steel prices to multiyear highs. ArcelorMittal (MT) only gets a quarter of its revenues from NAFTA. ArcelorMittal also posted its highest earnings in seven years. However, U.S. Steel Corporation (X) and AK Steel’s (AKS) earnings have lagged other steel companies in 2018.
Previously in this series, we discussed Nucor (NUE) and Steel Dynamics’ (STLD) third-quarter earnings guidance. In this part, we’ll discuss U.S. Steel Corporation’s (X) third-quarter earnings estimates compared to the company’s guidance.
In the previous part, we discussed Nucor’s (NUE) third-quarter earnings guidance. In this part, we’ll discuss Steel Dynamics’ third-quarter guidance. The guidance was released after the markets closed on September 17.
Last week, Nucor (NUE), the largest US-based steel producer, released its third-quarter guidance. The company expects to post an EPS of $2.35–$2.40 in the quarter. Nucor posted an EPS of $2.13 in the second quarter and $0.79 in the third quarter of 2017. Nucor’s third-quarter earnings guidance was in line with analysts’ estimates. Previously, Nucor posted better-than-expected guidance in the second quarter.
Now, we’re approaching the end of the third quarter. Nucor (NUE) released its third-quarter earnings guidance on September 14, while Steel Dynamics (STLD) released its earnings guidance on September 17. In this series, we’ll discuss Nucor and Steel Dynamics’ third-quarter guidance. We’ll also analyze the third-quarter guidance provided by other steel companies during their second-quarter earnings call. We’ll discuss steel companies’ outlook.
AK Steel (AKS) said today that it plans to release its third quarter 2018 financial results following the close of trading on the New York Stock Exchange on Thursday, October 25, 2018. AK Steel will also provide live listening access on the Internet to its earnings conference call to be held at 8:30 a.m. Eastern Time on Friday, October 26, 2018. Access to the webcast will be available from the home page of the company’s website at www.aksteel.com. Presentation slides will also be available on the webcast link and under the Investor Presentations section on the website. The webcast will be archived on the company’s website following the call for three months and will be accessible from the Investor News and Events section. AK Steel is a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, including electrical power, and distributors and converters markets. Through its subsidiaries, the company also provides customer solutions with carbon and stainless steel tubing products, die design and tooling, and hot- and cold-stamped components. Headquartered in West Chester, Ohio (Greater Cincinnati), the company has approximately 9,200 employees at manufacturing operations in the United States, Canada and Mexico, and facilities in Western Europe. Additional information about AK Steel is available at www.aksteel.com.
Earlier this year, President Trump imposed tariffs on US steel and aluminum imports. US steel companies like U.S. Steel Corporation (X) and AK Steel (AKS) have blamed more imports for their woes. Notably, China’s share in the global steel and aluminum markets has grown multi-fold.
As noted in the previous article, steel companies’ valuations look attractive based on forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples. However, these multiples are based on analysts’ earnings estimates, so it is prudent to read the multiples in conjunction with earnings estimates.
A look at the shareholders of AK Steel Holding Corporation (NYSE:AKS) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies whileRead More...
This month we’ve seen share buyback announcements by both Nucor (NUE) and Steel Dynamics (STLD). Share buybacks are a tool for management to return cash to shareholders. Generally, companies pursue share buybacks when they have surplus cash or they find their stocks undervalued. Steel companies’ cash flows have certainly improved amid higher steel prices. But do their valuations look tempting?
China (FXI) is the world’s largest steel producer and consumer. The country’s steel overcapacity and exports have been blamed for depressing global steel prices. However, Chinese steel exports have come down sharply from their 2015 highs. In August, China exported 5.8 million metric tons of steel products, a yearly fall of 9.8%. In the first eight months of 2018, Chinese steel exports have fallen 13.3% to 47.2 million metric tons.
President Trump has left the door open for exemptions from Section 232 tariffs. The exemptions would be on a product level as well as a country level. So far, countries like South Korea, Brazil, and Argentina have managed to see exemptions from Section 232 tariffs. The uncertainty about Section 232 exemptions is one reason why investors have shied away from steel stocks. In this article, we’ll see how Section 232 exemptions could impact US steel prices.