Dahlman Rose: Companies Expect Seasonal Slowness, Don’t Anticipate Economic Recovery To Stall

Dahlman Rose says, “ArcelorMittal MT, AK Steel AKS, Century Aluminum CENX, General Moly GMO, Norsk Hydro NHY, and Vale VALE reported 2Q10 results last week. Results were mixed, with 2Q10 earnings for MT, NHY, and AKS ahead of our estimates, and earnings for X and CENX below our estimates. Our overall takeaway is that most companies expect some seasonal slowness ahead but do not anticipate a stall in the economic recovery. This week Kaiser Aluminum and Rio Tinto will report.” “Metals & mining equity performance was mixed last week. The steel names we cover were all down, while base metal and diversified mining stock price performance varied. Disappointing guidance and cost pressure concerns, particularly for AK Steel (U.S. Steel to a lesser extent), hurt steel equities. Nevertheless, Chinese iron ore prices continued their climb higher and speculation has been growing that US mills will announce spot price hikes for September,” the analysts mention. “Base metals climbed higher last week despite unreassuring economic data (e.g. durable goods orders, consumer sentiment and 2Q10 GDP) and disconcerting comments from the Fed. Instead, investors seemed to focus more on declining inventories, a weaker dollar, and the Chinese economic outlook as optimism grows that the government will not implement any further tightening measures,” according to Dahlman Rose. More Analyst Ratings here