德银-欧洲-钢铁市场-钢材价格继续上涨-20180117-22页_1mb

Steel Price Tracker Summary - 17 January 2018

Core Content Overview

This document provides a detailed analysis of steel price trends, industry valuations, and key risks in the European, US, and Chinese steel markets as of January 17, 2018. It also highlights the performance of major steel companies such as ArcelorMittal and Voestalpine, and includes price data for various steel products like HRC, CRC, HDG, and Plate. Additionally, it outlines the company's valuation methodologies and risk factors for the steel sector.

Steel Price Trends

Hot Rolled Coil (HRC)

• Northern Europe: Prices rose by E6 (USD5) to E541 (USD650) in the last week, and by E8 (USD7) over three months.
• Southern Europe: Prices increased by E5 (USD4) to E524 (USD630) in the last week, and by E6 (USD19) over three months.
• US: Prices rose by USD14 last week and USD11 in the last month, with a three-month increase of USD86.
• Chinese Exports: Prices remained stable at USD572, with a three-month increase of USD19.
• Price Hikes: European players have started to push for a E20/t price increase.

Cold Reduced Coil (CRC)

• Northern Europe: Prices increased by E6 (USD2) to E620 (USD745) in the last week.
• Southern Europe: Prices rose by E26 (USD4) to E626 (USD752) in the last week.
• US: Prices increased by USD13 last week and USD22 in the last month, with a three-month rise of USD72.
• Chinese Exports: Prices were stable at USD615, with a three-month increase of USD15.

Hot Dipped Galvanised Coil (HDG)

• Northern Europe: Prices increased by E3 (USD3) to E665 (USD799) in the last week.
• Southern Europe: Prices rose by E17 (USD2) to E636 (USD764) in the last week.
• US: Prices increased by USD11 last week and USD25 in the last month, with a three-month increase of USD51.

Plate

• Northern Europe: Prices rose by E7 (USD6) to E583 (USD700) in the last week.
• Southern Europe: Prices were stable at E550 (USD661), with a decline in USD terms.
• US: Prices increased by USD11 last week and USD13 in the last month, with a three-month rise of USD86.

Key Raw Material Prices

Iron Ore

• Fines 62% Fe: Prices dropped by USD3/dmt to USD76/dmt, with a three-month decline of USD16.
• Fines 58% Fe: Prices fell by USD2/dmt to USD61/dmt, with a three-month decline of USD12.

Coking Coal

• Premium Coking Coal (Australian Exports): Prices decreased by USD9 to USD252, with a three-month drop of USD12.
• Coking Coal (Euros): Prices fell by E12 to E205, with a three-month decline of E18.

Scrap

• European Scrap: Prices dropped by USD1 to USD357/t.
• Turkish Scrap: Prices increased by USD2 to USD374/t.
• US Scrap: Prices rose by USD11 to USD335/t, with a three-month increase of USD54.

Main Viewpoints

• Steel Price Momentum: Steel price momentum continues to persist, but the analysis suggests that current cost support is likely to fade, leading to potential price declines in Europe.
• Steel Equities Volatility: Steel equities are volatile due to macroeconomic challenges and commodity price fluctuations.
• Price Hikes: Several European steel producers have announced price hikes, but the document notes that steel prices may not sustain their current strength.
• Price Differentials: The price differential between the US and China has widened, with the US showing stronger price increases and higher margins.
• Company Performance: ArcelorMittal and Voestalpine are highlighted as top picks due to their strong cash flow, valuation, and potential for growth.

Valuation and Risk Analysis

ArcelorMittal (MT.AS)

• Current Price: EUR30.52
• Target Price: EUR36.00
• Valuation Method: A blend of forward EBITDA (6.0x 2018E) and DCF (7.9% WACC, 2% terminal growth).
• FCF Yield: 9.6% (2018E)
• Key Risks: Macroeconomic weakness, lower steel prices, rising raw material costs, FX fluctuations, and geopolitical risks.

Voestalpine (VOES.VI)

• Current Price: EUR53.48
• Target Price: EUR57.00
• Valuation Method: DCF (7.7% WACC, 1.0% terminal growth).
• FCF Yield: 8-9% (underlying CF)
• Key Risks: Lower steel prices/demand, higher raw material costs, execution and legal risks, and potential M&A issues.

Key Industry Risks

1. Global Economic Growth: If growth does not meet expectations, steel demand may decline.
2. Steel Price Volatility: Lower steel prices could erode earnings.
3. Raw Material Costs: Higher iron ore and coking coal costs may limit profitability.
4. Political Influence: Government intervention in the steel trade could disrupt markets.
5. Project Delays: Expansion projects not progressing as expected may affect growth.
6. Rising Protectionism: Could lead to trade restrictions and market distortions.
7. Currency Fluctuations: FX rate changes may impact earnings and valuations.

Summary Table

Additional Highlights

• Steel Price Announcements: Recent price increases were announced by several steel producers, including CSN, Usiminas, and SSAB in the US.
• Company Leverage: ArcelorMittal has significant leverage and operates iron ore mines in multiple regions.
• Valuation Metrics: The document includes various valuation metrics such as P/E, P/BV, and EV/EBITDA for ArcelorMittal and Voestalpine.
• Financial Performance: ArcelorMittal reported strong EBITDA margins and positive cash flows in 2018, indicating strong operational performance.

Conclusion

The steel industry in Europe is experiencing price momentum, but the outlook is cautious due to potential cost support erosion and macroeconomic uncertainties. ArcelorMittal and Voestalpine are recommended as top picks, with strong cash flow and valuation metrics. The US market shows stronger price increases, while Chinese export prices remain stable. The document emphasizes the importance of monitoring macroeconomic conditions, steel demand, and commodity price trends to assess the sector's future performance.