1、North America Equity Research15 January 2019Equity Ratings and Price TargetsMkt CapPriceRatingPrice TargetCompanyTicker($mn)CCYPriceCurPrevCurEnd DatePrev End DateAllegheny TechnologiesATI US3,103.71USD24.79Nn/c28.00Dec-19n/cn/cCentury Aluminum CompanyCENX US750.73USD8.57Nn/c11.00Dec-1915.00Dec-19Cl
2、eveland-Cliffs IncCLF US2,667.75USD8.60OWn/c15.00Dec-19n/cn/cConstelliumCSTM US1,080.89USD7.70OWn/c15.00Dec-19n/cn/cFreeport-McMoRanFCX US16,912.80USD11.60Nn/c14.00Dec-19n/cn/cKaiser AluminumKALU US1,610.33USD95.95Nn/c98.50Dec-19n/cn/cNucor Corp.NUE US17,927.60USD56.59OWn/c89.00Dec-19n/cn/cStelcoSTL
3、C CN984.07CAD14.70OWn/c45.00Dec-19n/cn/cU.S.Steel CorpX US3,768.81USD21.04OWn/c65.00Dec-19n/cn/cTeck ResourcesTECK/B CN13,263.82CAD30.22OWn/c49.50Dec-19n/cn/cSource:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 11 Jan 19.North America Metals&Mining4Q18 Earnings Preview&C
4、alendarNorth America Metals&MiningMichael F.Gambardella AC(1-212)622-Bloomberg JPMA GAMBARDELLA Tyler J.Langton(1-212)622-Stephanie Yee(1-212)622-J.P.Morgan Securities LLCSee page 43 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered i
5、n its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Base metal and steel prices eased throughout Q
6、4,which,along with typical seasonality,should pressure Q4 earnings for most of the companies in our coverage universe.That said,we dont expect much further downside in U.S.steel prices,which even absent the 232,should be supported by just the stricter enforcement of existing trade duties and laws.On
7、 the base metals side,we see upside in the stocks when assuming forward curve prices that are not meaningfully higher than spot prices.Our coverage universe is up 13%on average YTD vs.the S&P 500s 4%gain,and we think our group could continue to outperform the market if just current prices hold.AKS r
8、esults should decline q/q on a weaker mix and higher planned outage costs,with shipments being about flat.EAF should see improved earnings q/q from both higher prices and sale volumes.NUEs and STLDs earnings should decline sequentially due to weaker seasonal shipments and lower prices,particularly w
9、ithin the companies flat roll operations.While pricing should be about flat q/q,STLC should see a sequential increase in earnings as planned outage costs decline and as it shifts more of its product sales towards the Canadian market and incurs lower Section 232 tariff costs.Xs results should increas
10、e q/q mainly from improved results in Flat Rolled,where higher shipments and lower costs should more than offset lower prices.CENXs earnings should decline sequentially on lower aluminum prices but still elevated alumina costs,and we are lowering our estimates and price target for the company to$11
11、from$15 to reflect lower aluminum price forecasts.CLFsshipments should be higher q/q and prices should be about flat to down slightly,leading to slight q/q increase in earnings.FCXs earnings should decline sequentially on lower copper and gold sales(mainly due to lower grades at Grasberg)and lower r
12、ealized copper prices.For SXCPs Coke business,we estimate production volumes to be down slightly y/y and EBITDA/ton to be$69,while we expect coal tons handled in Coal Logistics to be down slightly q/q and forecast EBITDA/ton to be up 4%q/q.TECKs earnings should increase q/q as higher coal prices and
13、 volumes and a move to profitability at Fort Hills offset lower realized prices for copper.2North America Equity Research15 January 2019Michael F.Gambardella(1-212)622- We estimate ATIs 4Q EPS to be about flat q/q,with improved results in High Performance offset by weaker results in Flat Rolled.CRS
14、results should be up q/q,with the company expecting about a 10%increase in operating income in both segments from solid demand.CSTMs Q4 EBITDA should take a step down from Q3 levels mainly due to typical seasonality.GSMs earnings should decline q/q on lower realized prices and shipments.For HAYN,we
15、expect EPS to take a meaningful step down q/q from a planned outage and typical seasonality.KALUs results should take a step up q/q on higher shipments.Finally,both RS and RYI should see a q/q decline in their results from a seasonal decline in shipments.3North America Equity Research15 January 2019
16、Michael F.Gambardella(1-212)622-DateEventTimeJPMEstimateStreetEstimateRisk to Street EPS*Comments and Conference Call DetailsJan 16Alcoa(AA/$28.55/OW)Earnings ReleaseConference CallAMC5:00pm$0.36$0.55We are forecasting 4Q18E EPS of$0.36 and EBITDA of$710mm.Earnings should decline q/q on lower realiz
17、ed alumina and aluminum prices,though we do expect higher bauxite and alumina shipments.On the call,we think most questions will focus on the declines in alumina and aluminum prices,further actions the company could take to reduce costs,and capital allocation.CC#:877-883-0383;ID:1509840Jan 22Alleghe
18、ny Technologies(ATI/$24.79/N)Earnings ReleaseConference CallBMO8:15 am$0.36$0.35We are lowering our 4Q18E EPS to$0.36 from$0.40 and 2019E EPS to$1.97 from$2.19 to reflect a higher share count.In 4Q18,earnings should be about flat q/q.High Performance sales growth is expected to be similar to 3Q and
19、operating margin is anticipated to improve from the 3Q level.4Q Flat Rolled results are expected to be weaker q/q due to lower raw material surcharges having an adverse EBIT impact of an estimated$10-12mm plus a LIFO headwind of an estimated$4mm.During the conference call,we expect discussions and Q
20、&A to include any updates on ATIs Section 232 exclusion request for its Tsingshan JV,managements outlook on the commercial aerospace and jet engine ramp,and the companys capital allocation priorities.Please visit for the webcast.Jan 22Steel Dynamics(STLD/$33.49/OW)Earnings ReleaseConference CallBMO1
21、0:00am$1.25$1.25We are forecasting 4Q18 EPS of$1.25,or the lower end of STLDs guidance of$1.25-1.29.In 4Q,STLD expects profitability in its Steel Operations to be strong but lower q/q due to the maintenance outages and resulting lower shipments at its flat roll operations,flat roll metal spread comp
22、ression,and seasonally lower shipments.Metals Recycling profits are expected to increase sequentially on improved non-ferrous metal spreads and shipments and improved ferrous metal spreads,with a partial offset from lower ferrous shipments Results in Fabrication are expected to increase q/q,with hig
23、her prices offsetting lower seasonal shipments.On the call,key questions will likely revolve around the companys outlook for steel prices,thoughts on the Section 232,demand in key end markets,and STLDs recent announcement that it plans to construct a new EAF,flat roll steel mill in the southwestern
24、U.S.with 3.0mm tons of annual capacity.CC#:862-298-07074North America Equity Research15 January 2019Michael F.Gambardella(1-212)622-DateEventTimeJPMEstimateStreetEstimateRisk to Street EPS*Comments and Conference Call DetailsJan 24Freeport-McMoRan(FCX/$11.60/N)Earnings ReleaseConference CallBMO10:00
25、am$0.14$0.20We are lowering our 4Q18E EPS to$0.14 from$0.24 and EBITDA to$948mm from$1,213mm mainly to reflect lower than expected realized copper prices in the quarter,with a partial offset from higher than expected gold prices.FCXs Q4 EPS should decline on a q/q basis.Copper sales should fall by 2
26、4%while gold sales should drop by 60%mainly due to lower grades at Grasberg,which should also push cash costs per pound higher.Realized prices for copper should be slightly lower while realized gold prices should be slightly higher.We are also lowering our 2019E EPS to$0.78 from$1.12 and 2020E EPS t
27、o$1.31 from$1.32 to reflect lower copper and gold price forecasts.Key topics on the call will likely revolve around the continued de-risking of its operations in Indonesia(Grasberg Block Cave and Deep MLZ),expansion opportunities at FCXs existing assets,and thoughts on capital allocation with the di
28、vestment transaction for Grasberg now complete.CC#:800-403-5770 or 706-679-8487.Passcode:2698525.Jan 29Nucor(NUE/$56.59/OW)Earnings ReleaseConference CallBMO2:00 pm$1.95$1.95We are lowering our 4Q18E EPS from$2.00 from$1.95,or the high end of the companys guidance of$1.90-1.95.Earnings should declin
29、e q/q on lower seasonal shipments,while realized prices,particularly on the sheet side,should ease as well.We expect discussions on the conference call to include market dynamics for sheet,plate,and rebar,any updates on the companys numerous investments(including its recently announced plate mill),a
30、nd managements capital allocation priorities.Please contact NUE for the CC#or visit for the webcast.Jan 30U.S.Steel(X/$21.04/OW)Earnings ReleaseAMC$1.90$1.86We are lowering our 4Q18E Eps to$1.90 from$1.97 to reflect weaker than expected steel prices in the quarter.In Q4,earnings should increase q/q
31、mainly from improved results in Flat Rolled.In the segment,shipments should be higher q/q and costs should move lower,with realized prices declining.Tubular earnings should see a modest increase on higher shipments and lower costs,with a partial offset from lower prices.Finally,USSE results should d
32、ecline due to inventory revaluation adjustments,while shipments and price should be about flat q/q.We expect discussions on the conference call to include steel pricing trends,demand from key end markets,and the Section 232.5North America Equity Research15 January 2019Michael F.Gambardella(1-212)622
33、-DateEventTimeJPMEstimateStreetEstimateRisk to Street EPS*Comments and Conference Call DetailsJan 31U.S.Steel(X/$21.04/OW)Conference Call8:30 amCC#:TBAJan 31Carpenter Technology(CRS/$41.44/N)Earnings ReleaseConference CallBMO10:00am$0.68$0.67We are looking for F2Q19 EPS of$0.68,or just slightly abov
34、e F1Q19 levels of$0.65.For F2Q19,CRS expects operating income in SAO to increase up to 10%q/q as demand signals continue to remain strong.For PEP,operating income is also expected to increase 10%q/q,helped by strong demand for titanium products and favorable oil and gas market conditions.Key questio
35、ns on the call will likely revolve around demand patterns in key end markets such as aerospace and the ramp of Athens.CC#:412-317-9259Feb 8Cleveland-Cliffs(CLF/$8.60/OW)Earnings ReleaseConference CallBMO9:00am$0.67$0.61We are modestly lowering our 4Q18E EPS to$0.67 from$0.71 to reflect slightly weak
36、er than expected steel prices and a higher share count from the companys convertible instruments.Shipments should be higher q/q,with our estimate at 6.8mm tons,and prices should be about flat to down slightly,leading to slight q/q increase in earnings.During the conference call,we expect management
37、commentary and Q&A to include updates on the HBI project,capital allocation,and the outlook for the steel and iron ore markets.CC#:833-236-5758.Passcode:1776397Feb 8GrafTech(EAF/$13.76/OW)Earnings ReleaseConference CallBMO10:00 am$0.78$0.71We estimate GrafTechs 4Q18E EPS to be$0.78,an increase from
38、3Q18 levels of$0.68.This increase should come from higher sales volumes(53kmt in 4Q18Evs.45kmt in Q3)and realized prices($10,000/mt in 4Q18E vs.$9,744/mt in Q3).We expect discussions and Q&A on the conference call to include needle coke and graphite electrode pricing trends,GrafTechs capital allocat
39、ion strategy,and the restart of St.Marys.CC#:866-521-4909.Conference ID:13925396North America Equity Research15 January 2019Michael F.Gambardella(1-212)622-DateEventTimeJPMEstimateStreetEstimateRisk to Street EPS*Comments and Conference Call DetailsFeb 21Reliance Steel&Aluminum(RS/$76.43/N)Earnings
40、ReleaseConference CallBMO11:00am$1.83$1.71We are forecasting 4Q18 EPS of$1.83,or the high end of the companys guidance of$1.75-1.85.As part of this guidance,RS expects shipments to be down 5-7%q/q due to typical seasonal patterns.Average realized prices are expected to be flat to up 1%q/q.On the cal
41、l,key questions will likely revolve around the companys outlook for steel prices and potential uses of cash for the company given its strong balance sheet and healthy free cash flows.CC#:TBATBAAK Steel(AKS/$2.79/OW)Earnings ReleaseAMC$0.14$0.11We are forecasting 4Q18E EPS of$0.14,or a q/q decrease o
42、ver 3Q EPS of$0.21.For 4Q18 on a q/q basis,AKS guided to flat shipments,as the seasonal slowdown in auto shipments should be offset by strong demand from distributors and converters which includes spot market opportunities.The company expects its average flat-rolled selling price to decrease by 2-3%
43、q/q as products sold to distributors and converters typically have lower selling prices.Planned outage costs are expected to increase to$15mm,from the$4.7mm incurred in Q3.With these estimates,AKS expects adjusted EBITDA margins to decrease by about 150 basis points(to 7.8%in Q4 from 9.3%in Q3)for a
44、djusted EBITDA of roughly$132mm.Key questions on the call will likely revolve around the companys outlook for steel prices and what price levels AK could potentially achieve for its 2019 annual auto contracts.CC#:TBATBACentury Aluminum (CENX/$8.57/N)Earnings ReleaseConference CallTBATBA($0.54)($0.53
45、)We are lowering our 4Q18E EPS to($0.54)from($0.51)after marking-to-market alumina and aluminum prices for the quarter.We expect earnings to fall sequentially on lower realized aluminum prices but still elevated alumina costs given the companys three-month lag.We are also lowering our 2019E EPS to($
46、0.48)from$0.99 to reflect lower alumina and aluminum price forecasts,and establishing a 2020E EPS of$0.31.We expect discussions on the conference call toinclude updates on the restarts at Hawesville and the impact of trade actions on metal prices.CC#:TBA7North America Equity Research15 January 2019M
47、ichael F.Gambardella(1-212)622-DateEventTimeJPMEstimateStreetEstimateRisk to Street EPS*Comments and Conference Call DetailsTBAConstellium(CSTM/$7.70/OW)Earnings ReleaseConference CallTBATBA0.070.09We are increasing our 4Q18E EPS to 0.07 from 0.04 and EBITDA to 104mm from 99mm,which brings our 2018E
48、 EBITDA to 498mm,or in-line with the companys recent guidance of 495-500mm that reflects the benefit to EBITDA(15mm for full year 2018)from the accounting change for pension interest cost.We are also increasing our 2019E EPS to 0.96 from 0.87 and EBITDA to 543mm from 528mm to reflect accounting chan
49、ges for leases and pensions and to reflect CSTMs guidance for 2019E EBITDA growth of 8-10%.In Q4,we expect EBITDA to take a step down from Q3 levels of 118mm mainly due to typical seasonality.On the call,we dont expect the company to make any changes to the 2019 guidance it gave at its Investor Day
50、in December.We think most questions will focus on the ramp of Bowling Green and how demand in key end markets such as auto and aerospace is tracking.CC#:TBA.TBAFerroglobe(GSM/$2.39/OW)Earnings ReleaseConference CallTBATBA($0.03)($0.03)We are projecting 4Q18 EPS of($0.03),vs.Q3 levels of$0.00.GSMs re
