Steel earnings to suffer from flat shipments, pricing weakness in Q4, Citi says

Voestalpine AG

22/01/2025 11:24

** Citi expects pricing and volume weakness to weigh
on European steelmakers' Q4 results, and says Q1 guidance
should factor in a delayed recovery
    ** It expects Q4 earnings to fall somewhat short of
consensus, with steel shipments likely flat q/q,
reflecting continuing lack of recovery
    ** Pricing weakness is likely to be an incremental
headwind and could weigh on Q1 guidance, despite it being
a seasonally better quarter, it adds
    ** Citi expects higher steel shipments q/q in Q1,
helped by seasonal recovery, but says earnings recovery
could be modest due to pricing
    ** Steel earnings recovery is likely to be H2
weighted, it says, as potential production cuts in China
could ease import pressure in Europe
    ** Citi's preferred stocks are ArcelorMittal  MT.LU 
and Acerinox  ACX.MC  
    ** Thyssenkrupp  TKAG.DE  and Salzgitter  SZGG.DE 
have higher leverage for potential volume recovery in H2,
it says
    ** Investor interest in Acerinox, Aperam  APAM.AS ,
Thyssenkrupp and Salzgitter could also be boosted by M&A,
it adds
    
 COMPANY                       RATING
 Acerinox                      buy
 Aperam                        neutral
 ArcelorMittal                 buy
 Erdemir  EREGL.IS             buy
 Outokumpu  OUT1V.HE           neutral
 Salzgitter                    neutral
 SSAB  SSABa.ST                buy
 ThyssenKrupp                  buy
 voestalpine  VOES.VI          neutral
 
 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))