BUZZ-Steel earnings to suffer from flat shipments, pricing weakness in Q4, Citi says
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 and Acerinox
Thyssenkrupp and Salzgitter have higher leverage for potential volume recovery in H2, it says
Investor interest in Acerinox, Aperam , Thyssenkrupp and Salzgitter could also be boosted by M&A, it adds
COMPANY RATING
Acerinox buy
Aperam neutral
ArcelorMittal buy
Erdemir buy
Outokumpu neutral
Salzgitter neutral
SSAB buy
ThyssenKrupp buy
voestalpine neutral