Bank of America reduced its forecast for US steel prices and earnings expectations for US steel producers, according to a report from Benzinga.
Bank of America analyst Timna Tanners reduced her price target for US hot rolled coil in the second half of 2019 from $628/nt to $572/nt. Tanners also adjusted expectations for full-year 2019 earnings per share at major US steel producers, including: Commercial Metals Company, from $2.05 down to $1.95; Nucor, from$4.65 down to $4.60; Reliance Steel & Aluminum Co., from $9.20 down to $8.99; Steel Dynamics, from $3.25 down to $3.19; and US Steel Corp., from $0.79 down to $0.75.
In a statement to Benzinga, Tanners said, “On Q2 calls, mills were constructive on demand improving in H2E, but we see risk of weaker volumes and prices, based on our channel checks and recent macro data.”
Tanners also said, “steel prices could find some near-term support from planned maintenance outages at major mills in coming months.”
Although lower imports would increase US domestic steel demand in theory, Tanners said, “many buyers loaded up on inventory after producers announced price hikes over the summer,” and slowing economic growth in China “also runs the risk of flooding the market with excess steel given China increased its production by 10 percent in the first half of the year.”
Tanners said she remains pessimistic, as more supply cuts are likely on the horizon.