AP reported that shares of steel companies fell on September 24th 2012 after an analyst lowered ratings on two manufacturers, citing higher steel prices that could make imports more attractive.
Mr Brian Yu analyst at Citi Research said that during the third quarter, domestic hot rolled coil steel products have been priced up to USD 108 per ton more than similar products sold in southern Europe. That suggests near term declines in hot rolled coil steel prices are likely.
He wrote that at the same time, higher US steel prices versus products sold in Europe and China will prompt more customers to look at imports. Imports have slowed since the beginning of the year, but this could change in the near future given the wide domestic steel price premium."
Mr Yu lowered his estimate for hot rolled coil steel to USD 656 per ton from USD 666 per ton in 2012 to USD 625 per ton from USD 650 per ton in 2013 and to USD 630 per ton from USD 650 per ton in 2014.
The analyst lowered his rating on US Steel Corporation to Neutral from Buy, citing his expectation for near term weakness in spot prices. The company's share price target was lowered to USD 23 from USD 30.
He also lowered his third quarter per share estimate to break even from 7 cents per share and his 2012 per share estimate to USD 1.28 from USD 1.53. For 2013, Mr Yu's forecast is USD 1.35 per share as compared with his previous estimate of USD 2 per share.
Analysts surveyed by FactSet predict earnings per share of 2 cents in the third quarter, USD 1.57 for 2012 and USD 2.37 in 2013.
Mr Yu also reduced ratings for AK Steel Holding Corporation. He lowered his rating to Sell from Neutral and set a share price target of USD 3.50 as compared with his previous estimate of USD 5.50.
The third quarter per share estimate remained at a loss of 36 cents. The 2012 per share estimate was lowered to a loss of 70 cents from a loss of 55 cents per share, and the 2013 earnings per share estimate dropped to 15 cents from 40 cents.
Analysts predict a loss of 35 cents per share in the third quarter; a loss of 50 cents in 2012 and income of 58 cents per share in 2013.
Source - Associated Press
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