Investment banker Goldman Sachs said Nucor and Steel Dynamics Inc. (SDI) have the highest chances of “weathering the Covid-19 storm,” according to news reports.
EAF-based steelmakers in general are likely to have an edge over BOF-based steelmakers, the banking firm said, primarily due to their cost-effectiveness. As such, Goldman Sachs has upgraded Nucor from a “hold” to “buy” rating, following a similar ratings upgrade for Steel Dynamics.
Goldman Sachs also noted that the sudden virus-based recession will likely last until the end of this year, and due to Nucor and SDI’s healthy balance sheets, reduced debt-levels and capex flexibility, those companies are likely to rebound in 2021.
However, Goldman Sachs downgraded US Steel after the steelmaker announced shutdowns of its blast furnaces at Gary Works and Great Lakes Works, along with pipe and tube production at its Lonestar and Lorain plants.