For Immediate Release
Chicago, IL – January 7, 2010 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Metals & Mining Industry, including Freeport-McMoRan Copper & Gold Inc. (FCX), Alcoa Inc. (AA), U.S. Steel Corp. (X), Steel Dynamics Inc. (STLD) and Nucor Corporation (NUE).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/29019/Metals+%26amp%3B+Mining+Stock+Review+-+Jan.+2010.
Metals & Mining Stock Review – Jan. 2010
We expect the global metal demand to improve in the long term with the recovery of the user industries. China is expected to remain the largest consumer of metals in the coming years. Despite the current slowdown in consolidation within the global metal industry, mergers and acquisitions (M&A) activity remains a critically important growth strategy for companies. While the economic downturn is a significant factor in short-term decisions regarding M&A activity, mining companies expect to make acquisitions over the next three years.
There has been an upward movement in copper prices in recent months, primarily due to stockpiling in China. Market conditions are expected to be favorable for copper in the next couple of years due to higher consumption of the metal in the developing nations. Companies like Freeport-McMoRan Copper & Gold Inc. (FCX) which have a high leverage to copper prices will benefit immensely from the potential demand for copper in the developing markets.
We also expect aluminum demand to increase over the next three years, outstripping supply growth. As a result, the aluminum market is likely to see deficit for a prolonged period. This provides a backdrop supportive of high alumina and aluminum prices. Leading aluminum producers such as Alcoa Inc. (AA) should benefit from the improving outlook for aluminum and alumina prices.
The World Steel Association is forecasting an 8.6% year-over-year decline in steel production, better than the previous forecast of a 14.1% decline, driven by a strong growth in Chinese steel demand. With signs of recovery across the world in the second half of 2009, the association is anticipating global steel demand in 2010 to grow by 9.2% to 1,206 million tons, which is similar to the level in 2008.
With steel demand picking up in the last couple of months, steel producers are restarting facilities. Recently, U.S. Steel Corp. (X) − the eighth largest steel producer in the world, the largest integrated steel producer headquartered in North America and one of the largest integrated flat-rolled producers in Central Europe, has restarted its blast furnace at its Hamilton, Ontario plant after a nine-month shutdown.
The current surge in steel demand narrowed losses for the third largest steel maker in the U.S. as well as for Steel Dynamics Inc. (STLD) and the largest recycler of steel scrap in the U.S. − Nucor Corporation (NUE) − in the third quarter of 2009.
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