Citi says weak Q3 for European steel already priced in by consensus

Voestalpine AG

22/08/2024 13:15

** Citi sees earnings weakness in the seasonally soft Q3 for
European steel, but expects that to already be taken into
consideration by consensus estimates
    ** It points out that European steel prices have remained
resilient amid falling raw material prices, leading to small
recovery in spot steel margins
    ** The brokerage sees recovery in spreads as a "precursor to
steel market recovery", which could potentially firm up later in
2024 following the peak of summer slowdown in Q3
    ** Citi sees the rate of exports continuing to slow for rest
of the 2024, alleviating the pressure of excess supply and
helping to restore the supply-demand balance
    ** ArcelorMittal  MT.LU  ("buy") and Salzgitter
 SZGG.DE ("neutral") are the broker's preferred carbon steel
names, and sees them as prime beneficiaries of potential
European recovery
    ** Sees Aperam  APAM.AS  ("neutral") and Acerinox  ACX.MC 
("buy") better positioned in stainless space
    ** It says moderation in plate prices in U.S. and capex ramp
up could be a near-term obstacle for SSAB  SSABa.ST , but keeps
"buy" rating on the Swedish company
    ** The broker also maintains "buy" on Erdemir  EREGL.IS ,
ThyssenKrupp  TKAG.DE  and "neutral" on Outokumpu  OUT1V.HE ,
voestalpine  VOES.VI 

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))