AK Steel Holding Corp

One of the key metrics in the steel industry is the capacity utilization rate. It represents the actual production compared to the maximum possible production.

China (FXI) exported 5.56 million metric tons of steel in December, a yearly fall of 1.9%.

Overall, it has been a mixed earnings season for steel companies.

The AISI releases the weekly steel production figures. Steel production in the US has declined 7.2% YoY in the first five months of this year.

1Q18 earnings season is in full swing. So what should you expect for U.S. Steel?

US iron ore (or USIO) is the main driver for Cleveland-Cliffs’s (CLF) top and bottom lines.

AK Steel is working towards stable margins throughout the business cycle. AK Steel has deliberately lowered its exposure to spot markets (X) (CLF).

Compared to the first ten months of last year, steel imports are up by more than 35%. This is an alarming situation.

In March 2018, President Donald Trump imposed a tariff of 25% on steel imports. What’s happened since?

The increased use of aluminum in vehicles is a threat for AK Steel (AKS). The automotive industry accounts for ~26% of steel consumption in the U.S.

AK Steel (AKS) reported adjusted EBITDA of $69.2 million in 3Q17, compared with $142 million in 2Q17 and $157 million in 3Q16.

Nucor (NUE) expects its 3Q16 performance to improve as compared to 2Q16. The key driver of Nucor’s 3Q16 performance would be the reset of contracts.

Let’s first consider why investors should monitor rig counts. Well, rig counts tell you how many rigs are currently active for drilling.

With the recent imposition of anti-dumping duties, imports of tubular goods will likely decrease, helping U.S. Steel’s revenue in the tubular segment to increase.

U.S. Steel (X) has the lowest forward valuation multiple in our coverage of steel stocks. The stock is trading at 4.97x its 2018 consensus EBITDA.

Due to an increase in electricity costs, Nucor’s energy cost per ton of steel in 3Q14 went up by almost $1 from the corresponding quarter last year.

AK Steel (AKS) generated free cash flow of $147.0 million in 2Q17 compared to $3.8 million in 1Q17. It generated free cash flow of $111.0 million in 2Q16.

U.S. Steel (X) expects its slab production capacity to increase by 1.0 million tons by 2020 from the current level of 10.0 million tons.

Steel companies such as U.S. Steel (X), Nucor (NUE), and ArcelorMittal (MT) sell their products in the spot market or under contract sales.

Steel stocks have been consolidating for the last few trading sessions. But so far, they’re having a tepid year.

Despite President Trump’s tariffs on imported steel, US steel stocks—with the exception of Steel Dynamics—have sagged this year.

China’s steel and aluminum overcapacity has earned it the ire of several countries.

Previously in this series, we’ve compared steel companies’ 4Q17 shipments and average selling prices (or ASPs).

After the imposition of Section 232 steel and aluminum tariffs last year, several observers warned that we could see a spike in downstream imports.

China is the world’s largest steel consumer, steel producer, and steel exporter. It dominates the global steel markets probably like no other country ever has.

Previously in this series, we looked at China’s steel demand indicators. It’s also important for investors to look at the supply side of the equation.

Integrated miners like U.S. Steel and ArcelorMittal use primarily iron ore, whereas minimills like Nucor and Steel Dynamics rely more on steel scrap.

Due to trade cases, the US steel industry has turned into a virtual island largely immune to global steel prices—at least in the short term.

Bank of America Merrill Lynch has raised its 2017 hot rolled coil steel forecast to $700 per ton. The brokerage also upgraded U.S. Steel (X) from a “neutral” to “buy.”

Despite its cost headwinds, U.S. Steel (X) expects to post EBITDA of $1.3 billion in 2017.

Steel executives have been regularly blaming the steep rise in US steel imports as the main reason for their woes. Last year, three companies presented their cases before members of Congress.

Strong steel demand should turn into higher revenues for U.S. steel companies. However, rising imports have impacted steel demand.

U.S. Steel (X) lowered its 2018 EBITDA guidance due to the recent correction in spot steel prices.

AK Steel (AKS) is still marginally above its 2015 lows. But it’s still among the worst performing steel companies in 2015.

Almost all of the iron ore miners are cutting costs, which is driving the cost curve down. This will put additional pressure on prices.

During AK Steel’s second-quarter earnings call, analysts could be closely watching the company’s ASP (average selling price) guidance.

If the Trump administration moves forward on the proposed infrastructure investments, it could boost US steel demand.

Although global steel prices have weakened this year, steel bulls expect the probe into steel imports to provide some sort of relief for US steel plays.

The GDP figures in the second quarter raised fears about the European Union’s sustainability growth. The ECB recognized the severity of the situation.

Last week was mixed for steel stocks—they followed different trajectories. With gains of 6.6%, AK Steel (AKS) was the biggest gainer.

Almost 60% of U.S. Steel’s US flat steel sales are either spot or have monthly or quarterly resets and would enjoy the benefits of higher spot steel prices.

Steel Dynamics (STLD), the third largest US-based steel producer after Nucor (NUE) and U.S. Steel (X), is expected to release its 3Q17 earnings on October 18.

Analysts expect United States Steel to post revenues of $2.98 billion in 2Q17. It posted revenues of $2.72 billion in 1Q17 and $2.58 billion in 2Q16.

Last week started on a positive note for most steel stocks, with most seeing upward price action on Monday. But sentiments were mostly negative after that.

China is the world’s largest steel producer, consumer, and exporter. Last year, we saw a steep rally in Chinese steel prices.

AK Steel (AKS) reported its third-quarter earnings on October 25 after the markets closed. The company reported revenues of $1.74 billion.

China released its April trade data on May 8. The data weren’t received well by investors. Asian markets were trading lower in early trade.

Cleveland-Cliffs (CLF) is scheduled to release its 3Q17 results before the US market opens on October 20. In this series, we’ll look ahead to CLF’s earnings and management call.

Cleveland-Cliffs (CLF) will release its second-quarter results before the market opens on July 20.

During the second-quarter earnings call, U.S. Steel Corporation raised its 2018 EBITDA guidance to $1.85 billion–$1.90 billion.

China is the biggest steel consumer. It accounts for almost half of global steel consumption. The slowdown in Chinese steel consumption isn’t a healthy sign for global steel markets.

Of the three forms of cash flow, operating cash flow is the most important for a company. Let’s explore the trend in various steel companies’ cash flow metrics in 2Q15.

Earlier this year, China announced capacity cuts in order to curtail its excess steel. The same commitment has been reiterated by China several times.

Nucor has been increasing its presence in the automotive sector over the last couple of years.

U.S. Steel Corporation (X) produces steel in blast furnaces and uses coking coal and iron ore (CLF) as raw material.

Cliffs Natural Resources’ results for 4Q16 were hugely positive and beat the market expectations by a wide margin.

During its 2Q16 call, AK Steel (AKS) pointed to a “significant rise” in CRC steel imports from Turkey, Vietnam, and Australia.

AK Steel (AKS) has been among the worst-performing steel stocks (MT) (STLD) in 2017 with year-to-date losses of more than 46% as of May 17.

According to data released by the American Iron and Steel Institute, US steel production fell 4.9% YoY (year-over-year) in the week ended September 24, 2016.

Spot steel prices in the US (DIA), especially in the flat-rolled segment, have risen over the last month.

AK Steel expects its 2Q17 average selling prices to be “marginally higher” compared to 1Q17. However, AK Steel could witness higher costs in 2Q17.

By analyzing how steel industry indicators are shaping up, you can get a sense of how steel companies could perform beyond the current quarter.

AK Steel and U.S. Steel are expected to post a loss in 2Q15. U.S. Steel’s earnings have been hit because its tubular segment hasn’t been doing well.

US steel has seen a change in fortunes this year. Trump’s win has been a positive catalyst for the industry.

Cleveland-Cliffs (CLF) has witnessed a turnaround of sorts in the last four years.

During the 3Q16 earnings call, markets will wait for updates from ArcelorMittal on its negotiations with automotive customers.

Overall, the third quarter has been a subdued earnings season for steel companies (SPY). Nucor’s earnings fell short of analysts’ expectations.

AK Steel (AKS), which released its earnings on October 31, fell 21.5% after its 3Q17 earnings release.

U.S. Steel Corporation (X) released its second-quarter earnings on August 1 after the market closed. Its revenues were $3.6 billion.

Due to a seasonal uptick in steel demand and better-than-expected demand from the construction sector, Chinese steel prices got a boost.

In the past year, analysts have raised their revenue projections for Cliffs from ~$1.8 billion to ~$2.0 billion for the year.

Metal shares have had a dream run since mid-2013. Specifically, steel companies’ shares have been defying all the laws of gravity.

The EU saw the biggest decline in steel production in February as compared to other major steel-producing countries.

Cliff’s Natural Resources has long-term contracts with US steelmakers and is thus affected more by what’s happening in US steel than in seaborne iron ore.

Cliffs Natural Resources (CLF) is trading at a forward EV-to-EBITDA multiple of 13.2x, compared to its last-five-year average of 9.6x. Its stock price has risen 40% in the last month.

On July 6, Macquarie initiated coverage on ArcelorMittal with a “outperform” rating and target price of 30 euros.

It’s been a mixed earnings season for steel investors. Nucor and Steel Dynamics missed consensus earnings estimates. AK Steel and U.S. Steel posted better-than-expected earnings.

The steel market has been challenging in 2015—prices crashed due to Chinese exports. But Nucor’s financial strength and high profit margins helped it cope.

Cliffs Natural Resources (CLF) is trading at a forward EV-to-EBITDA multiple of 12.9x, compared to its trailing-five-year average of 9.6x.

Iron ore and steel scrap are the key steelmaking raw materials. In the United States, steel prices and scrap prices tend to move in tandem.

Cliffs has “buy” and “sell” recommendations from 22% of analysts each, while 56% of the analysts are recommending a “hold.”

The US steel industry (X) (AKS) (NUE) lists “unfairly traded steel products” as its biggest woe.

Cliffs Natural Resources (CLF) is the largest and lowest-cost supplier of iron ore pellets in the United States.

The growth in steel imports in 2015 could be less spectacular. There are several reasons for this outlook. Let’s discuss them in detail.

During its 1Q17 earnings call, the market will look for ArcelorMittal’s commentary on the steel price outlook.

While US steel prices rose to a high of $660 per ton in March 2017, they fell to $580 per ton in June.

ArcelorMittal’s 2Q17 earnings ArcelorMittal (MT), the world’s largest steelmaker, is scheduled to release its 2Q17 earnings on July 27. Analysts polled by Thomson Reuters expect the company to post revenue of $17.4 billion in 2Q17. ArcelorMittal posted revenue of $16.0 billion in 1Q17 and $14.7 billion in 2Q16. ArcelorMittal’s 2Q17 EBITDA (earnings before interest, tax, […]

China’s automotive sales fell in July. According to the China Association of Automobile Manufacturers, China’s vehicle sales stood at ~1.89 million vehicle units.

U.S. Steel Corporation released its 1Q18 results yesterday after markets closed.

US steel prices and order books for customers are the major revenue drivers for Cliffs Natural Resources’s (CLF) US division.

ArcelorMittal (MT), the world’s largest steelmaker, will release its 3Q16 earnings on November 8. It has been a remarkable year for the company.

U.S. Steel (X) has received a “buy” rating from 51% of its analysts, while 13% analyst recommend a “sell.”

President Trump has hardened his stance on trade issues, threatening tariffs on billions of dollars of Chinese goods.

In this article, we’ll look at ArcelorMittal’s (MT) valuation multiples ahead of its 2Q17 earnings.

Most of Cliffs Natural Resources’ (CLF) revenues and earnings are derived from its US steel division. This makes its drivers unique among peers.

China exported 8.1 million metric tons of steel in November 2016, a fall of 16.0% YoY (year-over-year). Its exports fell 14.6% YoY in October.

US steel stocks (XME) U.S. Steel Corporation (X) and AK Steel (AKS) are trading sharply higher today. Nucor (NUE) and Steel Dynamics (STLD) are also in the green.

3Q16 earnings Wall Street analysts update their target prices after a company’s quarterly earnings release. After U.S. Steel Corporation’s (X) 3Q16 earnings release, several leading brokerages slashed the company’s target price. Target price cut For instance, Credit Suisse, which was among the bullish brokerages on U.S. Steel, cut the company’s target price from $29 to […]

Most steel stocks continue to trade near 52-week lows. U.S. Steel Corporation (X) has fallen more than 70% year-to-date.

Based on its September 16, 2016, closing price, U.S. Steel has a 14-day RSI of 27.5, which means it looks oversold, similar to other US steelmakers.