MS turns neutral on carbon steel makers, says stainless steel still lags

Eregli Demir ve Celik Fabrikalari

07/12/2023 11:49

** Morgan Stanley says earnings prospects for European
carbon steel makers have improved, pointing to improving prices,
easing import pressures, while staying cautious on the stainless
market
    ** "Although we are still to see a convincing demand
recovery, the worst appears behind us," it says, raising the
sector rating to "in-line" from "cautious"
        ** It also points to below average inventory levels,
which could lead to modest restock
  
        ** MS notes superior earnings momentum in the sector
compared to the stainless steel industry, where it sees prices
lagging at inflection point
  
        ** "Uncertain global demand picture" makes the U.S.
stainless market more attractive over its European counterpart,
it adds
  
    ** The broker cuts SSAB  SSABa.ST  to "equal-weight' from
"overweight," saying that key catalysts - including the ongoing
buy-back programme - have already played out
    ** It notes that the growing disconnect between SSAB's U.S.
plate prices and the worsening supply/demand, as well as the
recent price increase, may be cause for concern going forward

 (Reporting by Elsa Ohlen, Matteo Allievi and Boleslaw Lasocki)
 ((elsa.ohlen@thomsonreuters.com;))