2019.09.30 – Steel Industry – Comparison Of Integrated Steelmakers

$ 499 + HST

EXECUTIVE SUMMARY

  • On August 16th we upgraded U.S. Steel to Overweight from Neutral at $10.91 per share in expectation that global recession worries may wane, steel prices may rebound and that higher scrap steel and iron ore prices both will support steel prices to the benefit of U.S. Steel’s captive iron ore output.
  • We note that over 10 m.t. of similar electric furnace sheet steel minimill capacities are being added and over 22 m.t. of NEW electric furnaces targeted, although the JSW Steel 1.5 m.t. melt shop expansions both in Ohio and Texas both have been postponed and some other projects may be delayed.
  • We theorize that the expansions of NUE, STLD and Big River Steel will hurt one another, and drive up the scrap steel price to the benefit of U.S. Steel and other integrated steelmakers. Consensus steel expectations appear too gloomy.