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Steel Price Gains Will Beat Predictions, Nomura Says |
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administrator |
DATE |
2009-08-19 14:06:26 |
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Steel Price Gains Will Beat Predictions, Nomura Says
By Mark Herlihy
Aug. 18 (Bloomberg) -- Nomura Holdings Inc. Japan’s largest brokerage, initiated coverage of Europe’s steel industry with a “bullish view” and said prices will beat market predictions because of higher production costs in China.
“The market has underestimated the potential for steel prices to move much higher in the second half of 2009 and 2010,” Paul Cliff, an analyst in London, wrote in a note dated yesterday. A recovery in demand will outpace increased use of production capacity, he said.
Demand in China, the world’s biggest steel user, is “robust,” with the outlook for construction in the country remaining “strong,” Cliff said. Chinese steel demand will grow 15.6 percent in 2009 and 10.6 percent in 2010, he said. Global demand is expected to increase 12.2 percent in 2010 after declining 10.3 percent in 2009, Nomura said.
ArcelorMittal, the world’s biggest steelmaker, said last month it was restarting blast furnaces in Belgium, France and Spain as customers bought steel to replace depleted inventories. The Luxembourg-based company, which cut production as much as 45 percent after demand plunged last year, said in July it was beginning to see “more positive signals.” The company is Nomura’s top European stock pick and rated as a “buy.”
ThyssenKrupp, Salzgitter
The price of European hot-rolled steel coil, a benchmark product used in cars and construction, declined 46 percent in the past year to 415 euros ($585) a metric ton, according to data compiled by Metal Bulletin.
Cliff also recommended buying shares in ThyssenKrupp AG, Germany’s largest steelmaker, as it should “be an early beneficiary of rising steel and iron ore spot prices.” He rated Germany’s Salzgitter AG a “buy” and recommended investors reduce their holdings in Sweden’s SSAB Svenskt Staal AB and Austria’s Voestalpine AG.
Nomura’s also gave “buy” recommendations on Japan’s Nippon Steel Corp., South Korea’s Posco, India’s Tata Steel Ltd., China’s Maanshan Iron & Steel Co., and Russian steelmakers Evraz Group SA and OAO Severstal.
Resource from www.bloomberg.com |
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