Halister News

(Bloomberg) -- Shares of Asian steelmakers such as Posco and Hyundai Steel should rise, as upside catalysts have yet to be reflected in prices, Nomura analysts including Cindy Park and Yuji Matsumoto say in a note.

• Nomura prefers Korean steel stocks to those in Japan; says top buy is Posco, raising PT to 400,000 won vs 360,000 won; Hyundai Steel upgraded to buy from neutral, PT raised to 75,000 won vs 66,000 won
  • Other buys include Korea Zinc and Mitsui Mining & Smelting
  • Neutral on Nippon Steel & Sumitomo Metal, JFE Holdings and Hitachi Metals
• Catalyst for sector is news of further steel capacity cuts in China
  • China’s measures to reduce excess capacity have helped Asian steel profitability and improved global utilization to 68% vs 65% in 2015; utilization is expected to reach 71% in 2020
  • China is world’s largest steelmaker with 50% of global supply
• Other catalysts are investments in infrastructure projects that could boost steel demand by up to 3.2% y/y in 2017-18, U.S. infrastructure policy and environmental compliance tightening further in China

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net Kurt Schussler