- The steel industry’s (NYSEARCA:SLX) apparent demand shows a promising start for 2018, and recent due diligence within the sector shows much better Q4 2017 shipments, likely due to hedge buying in front of rising raw materials and the Jan. 16 Section 232 deadline, KeyBanc analysts say.
- The outlook prompts the firm to raise its 2018 U.S. hot rolled coil price estimate to $655/ton from $615, and to raise stock price targets for Steel Dynamics (STLD +1.1%) and Reliance Steel (RS +1.1%).
- KeyBanc upgrades Timkensteel (TMST +2.2%) to Sector Weight from Underweight on higher EBITDA estimates driven by higher raw material prices and mix and potential upside in energy demand.
- The firm also says share prices for AK Steel (AKS -1.2%) and U.S. Steel (X -0.2%) are baking-in persistence of an elevated pricing environment, Nucor (NUE +0.1%) share prices likely are supported by tax reform, and Cleveland-Cliffs (CLF +1.5%) seems under-appreciated despite recent buoyancy in North Atlantic Basin pellet premium and shares could be well suited for tactical upside into the quarter.
- Source: Bloomberg First Word
- Now read: AK Steel: Time To Sell After Rally?
Original article