Bank of America has raised its steel price forecast but sees no remaining upside for now. The firm has upped its U.S. benchmark hot rolled coil (HRC) 2016 average price estimate from $485 to $530/short ton.
Analyst Timna Tanners is calling for HRC prices to peak at $600/t in Q3 before pulling back in Q4.
“Sheet market strength has been driven by supply constraints, as trade cases and higher Q1 Asian prices reduced import offers and AKS and X have each kept blast furnaces idle,” Tanners explained.
In addition to upping its steel price outlook, Bank of America has also upgraded United States Steel Corporation X from Underperform to Neutral due in part to its recent balance sheet improvements. Tanners believes that U.S. Steel’s debt refinancing has removed any near-term liquidity concerns.
The firm names Steel Dynamics, Inc. STLD as its top steel stock play on higher sheet prices and lower scrap prices.
In addition to Steel Dynamics, Bank of America maintains Buy ratings on the following stocks:
- Alcoa Inc AA
- Allegheny Technologies Incorporated ATI
- Kaiser Aluminum Corp. KALU
- Martin Marietta Materials, Inc. MLM
- Nucor Corporation NUE
- Summit Materials Inc SUM
- Vulcan Materials Company VMC
Disclosure: The author holds no position in the stocks mentioned.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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