Despite Low Prices, Deutsche Bank Still Believes in Steel Stocks

Analysts at Deutsche Bank recently updated their outlook on the steel industry now that most steel companies have released fourth quarter earnings. Deutsche Bank lowered its average price targets by 12% due to plunging steel spot prices, but reiterated its buy ratings for three big names in the space.

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Deutsche Bank stress tested its model for a full-year HRC price of $550 per short ton ($25 below its forecast) and found that the average downside in expected EBITDA for the companies it covers is about 19%.

Chinese steel prices were flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($134.59) and a low price of CNY 840.00 ($134.59) per dry metric ton. For the fifth day in a row, the price of Chinese HRC remained essentially flat at CNY 2,570 ($411.79) per metric ton. The price of Chinese coking coal remained essentially flat at CNY 1,080 ($173.05) per metric ton.

The steel billet cash price was unchanged on the LME at $500.00 per metric ton. The 3-month price of steel billet saw essentially no change on the LME for the fifth day in a row, remaining around $480.00 per metric ton.

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The US HRC futures contract 3-month price moved yesterday. After a few changeless days, prices dropped 2.7% to $545.00 per short ton. US HRC futures contract spot saw its price drop 0.4% to a 30-day low of $540.00 per short ton yesterday.

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