Integrated operations have been one of the factors driving the recent performances of steel companies.
Fixed costs associated with blast furnaces are higher, which severely affects steel companies’ profits during downturns.
While copper and aluminum are still above their 2009 lows, spot steel prices in the United States have already reached their 2009 lows.
While the broader slump in steel markets has negatively impacted all steel companies, U.S. Steel, ArcelorMittal (MT), and AK Steel have been the most severely hit.
Under the Carnegie Way transformation strategy, U.S. Steel worked to strengthen its balance sheet with an intense focus on cash flows, improving operational efficiency, and optimizing supply chain.
The Carnegie Way transformation was expected to restore the glory days of U.S. Steel. However, looking at the stock’s performance, the company’s value today is lower than what it was a century back.
Based on the EV/EBITDA valuation multiple, CF Industries is trading at 6.5x. This is above its seven-year average of 5.3x.
CF Industries currently has a leverage ratio, which is calculated as net debt to EBITDA of 2.4x. This is a significant increase since 2013.
CF Industries’ cash flow to capital expenditure ratio has been falling. CF Industries’ cash flow to capital expenditure ratio stands at 0.75 as of 3Q15.
Over the years, prices of natural gas have declined. CF Industries’ natural gas costs appear to be below the Henry Hub natural gas prices.
Overall prices for nitrogen fertilizers have weakened over the one-year period, which impacted CF Industries’ (CF) revenue.
Over the past three years, CF Industries’ (CF) free cash flow has been declining, which is concerning for value investors.
CF Industries remain highly sensitive to the conditions in the US because this market accounts for about 84% of the company’s revenue.
CF Industries’ ammonia segment, followed by the UAN (urea ammonium nitrate) segment, contributed the most toward its decline.
In this series, we will discuss the most recent developments in CF Industries. We’ll discuss how the company was impacted by realized prices and the factors pressuring its shipments.
Getting power at competitive prices is key for aluminum smelters, especially when market conditions are as challenging as they currently are.
Alcoa’s stock has witnessed a decent upwards move over the last few trading sessions, gaining more than 16% since November 12.
Most steel stocks continue to trade near 52-week lows. U.S. Steel Corporation (X) has fallen more than 70% year-to-date.
Freeport-McMoRan (FCX) jumped smartly in August after activist investor Carl Icahn disclosed his 8.5% stake in the company, known as the “Icahn lift.”
On November 13, Freeport-McMoRan closed at $8.68. Although its stock is down more than 25% so far in November, it is still trading ~12% above its 2015 lows.