Steel Companies’ Valuations Revert to Mean in June
Steel companies were trading above their long-term trading multiples between February and June this year. This was due to the sharp rally in this sector.
Based on June 24 closing prices, U.S. Steel Corporation and AK Steel each have a 14-day RSI of 46. Nucor and Steel Dynamics each have a 14-day RSI of 42.
Steel companies managed to win three key trade cases for flat rolled steel products. As a result of these duties, flat steel prices have risen more than 70% YTD.
The EU hasn’t been able to act decisively against higher Chinese steel imports. European steel production has fallen much steeper this year.
ArcelorMittal (MT) isn’t a stranger to the crisis facing the European steel industry. It gets ~50% of its revenues from Europe.
The Brexit vote created a financial tsunami on June 24. It drowned all risk assets. US spot steel prices have literally been on fire this year.
The suspense over Brexit, or the United Kingdom leaving the EU (European Union), is finally over. The country decided to leave the EU.
For the week ended June 18, 2016, Canadian Pacific (CP) reported a fall of 7.6% in its overall intermodal traffic.
Canadian Pacific (CP) registered a fall of 9.7% in total railcars in the week ended June 18, 2016. The company hauled nearly 29,000 railcars in the week.
In the week ended June 18, 2016, Canadian National Railway’s (CNI) overall intermodal traffic fell by 7.5%. Its container traffic fell by 6.1%.
Canadian National Railway recorded a 13.7% fall in total railcars in the week ended June 18, 2016. The company hauled nearly 55,000 railcars in the week.
In the week ended June 18, 2016, Kansas City Southern’s (KSU) total railcars rose by 3.5% compared to the corresponding period last year.
Kansas City Southern reported a fall of 2.6% in overall intermodal traffic in the week ended June 18, 2016. Container traffic fell by 1.6% in the week.
BNSF operates in the western United States in direct competition with Union Pacific. BNSF’s total railcars for the week ended June 18, 2016, fell by 7.2%.
From nearly 101,000 containers and trailers in 2015, BNSF’s intermodal traffic fell to more than ~96,000 containers and trailers in 2016.
In the week ended June 18, 2016, Union Pacific’s (UNP) overall intermodal traffic fell by 4.2% compared to the corresponding period in 2015.
In the week ended June 18, 2016, Union Pacific’s total railcars fell by 8.2% to over 90,000 units compared to over 98,000 units in 2015.
In the week ended June 18, 2016, CSX Corporation’s total intermodal traffic fell by 2.0%. Its intermodal volumes fell to over 54,000 units.
In the week ended June 18, 2016, CSX Corporation’s carloads excluding coal and coke fell by 3.6%
Norfolk Southern’s (NSC) total intermodal traffic for the week ended June 18, 2016, fell by 3.8% to ~75,000 containers and trailers.