AK Steel Holding Corp

U.S. Steel Corporation has three segments: Flat Rolled, Europe, and Tubular. The company’s Tubular segment produces OCTG (oil country tubular goods) that are used in the energy sector.

Analysts expect ArcelorMittal (MT) to post revenues of $14.6 billion in 4Q16. The company posted revenues of $14.5 billion in 3Q16 and $13.9 billion in 4Q15.

Chinese demand is the key driver of iron ore prices, as the country accounts for more than two-thirds of seaborne demand (CLF) (BHP).

Cliffs Natural Resources (CLF) was trading at $8.85 on December 23, 2016, which represents a 46% rise since Donald Trump’s win in the US presidential election. That brings the year-to-date rise to a whopping 430.0%.

The United States is the largest steel importer globally. Steel companies such as U.S. Steel Corporation frequently blame steel imports for the US steel industry’s woes.

According to data compiled by Metal Bulletin, spot HRC (hot rolled coil) prices rose from $380 per short ton to $640 per short ton between January 2016 and June 2016.

One of the key features of steel companies’ 3Q16 financial performance was lower-than-expected revenues.

U.S. Steel Corporation (X) released its 3Q16 financial results on November 1 after the market closed, and it held its earnings conference call on November 2.

The bulls and bears have their own sets of arguments about U.S. Steel. U.S. Steel (X) and AK Steel (AKS) mainly use iron ore as a raw material.

China’s passenger car sales rose 26% year-over-year in August. This is the fourth consecutive month that car sales have risen in the double digits.

US Spot hot rolled coil prices have risen in the ballpark of $200 per short ton in 2016. Spot cold rolled coil prices have risen by ~$300 per short ton.

Valuations Valuation multiples are key metrics that investors consider carefully. With the help of relative valuations, we can compare a company’s valuation with its closest peers’ valuations. There are several valuation metrics that we can use. For companies in cyclical industries such as steel and mining, the EV/EBITDA (enterprise value to earnings before interest, taxes, depreciation, and amortization) […]

The EU hasn’t been able to act decisively against higher Chinese steel imports. European steel production has fallen much steeper this year.

Cliffs Natural Resources (CLF) is trading at a forward EV/EBITDA multiple of 11.0x compared with its last five-year average of 8.0x.

In May, ~14.5 million metric tons of steel were produced in the European Union. That was a YoY decline of 5.5%.

The excess global steel capacity will take a lot of time to balance out. The capacity closures in China, if they happen at all, will be gradual.

Of 15 analysts covering Cliffs Natural Resources, eight have given it a “hold” recommendation, and seven have given it a “sell” recommendation.

In its 4Q15 earnings release on January 27, 2016, Cliffs Natural Resources (CLF) may provide a further update on its venture into a direct reduced iron business.

Steel companies’ product portfolios and end market exposures can have significant impacts on company performance.

A look at the geographical exposure of different steel companies, which are exposed to the overall economic activity of the regions in which they operate.

Nucor’s net revenues fell ~18% in 2Q15, compared to the corresponding quarter last year. Most steel companies have reported lesser revenues in 2Q15 as well.

US Steel’s 1Q earnings results came in lower than analyst estimates, and the company’s share price tanked more than 10%.

Steel prices crashed by almost two-thirds at the peak of the global financial crisis in 2009. Last year, they dropped by 10%.

Steel scrap prices fell by ~20% in 2014. Lower steel scrap prices should bring down unit production costs for steel plays.

While iron ore prices crashed, production costs for iron ore haven’t come down. Steel plays’ mining operations have been hit by the fall in iron ore prices.

The difference between Chinese and US steel prices is still quite high to encourage imports. Marginal narrowing of the price difference won’t deter imports.

China’s shadow banking includes the trust sector, the off balance sheet lending by commercial banks, and financing vehicles of commercial banks.

U.S. Steel Corporation’s stock has surged in the past few months, delivering more than 150% growth in the last year.