What’s the Way Forward for Steel Companies after 2Q16 Earnings?



Steel companies’ 2Q16 earnings

The earnings season for 2Q16 is nearly over, and most steel companies have reported their earnings for the quarter. In this series, we’ll explore some of the key highlights of major steel companies’ 2Q16 earnings. We’ll also see how different companies are playing the recent recovery in the steel industry (XME).

It’s been a remarkable year for steelmakers, as can be seen in the graph above. Fiscal 2016 started on a weak note, and commodity companies fell to multiyear lows in January. However, we saw decent upward price action between February and April as concerns over China’s slowdown eased. Furthermore, spot steel prices in the US rallied handsomely this year, mainly due to the steep anti-dumping duties imposed on flat-rolled steel products.

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2Q16 price action

Most steel companies’ 2Q16 earnings were received well by markets. U.S. Steel (X) rose by 11% after its 2Q16 earnings release, while AK Steel (AKS) surged by more than 14% after its 2Q16 financial results. ArcelorMittal (MT) also saw an upward price action of 6% after its 2Q16 earnings release. However, Nucor (NUE) saw negative price action after the company released its 2Q16 financial results.

Although steel companies managed to beat their consensus earnings estimates, there are other aspects that markets look for in companies’ quarterly financial results—steel shipments, for example.

In the next part, we’ll explore how different steel companies fared in the steel shipment metric in 2Q16.


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