What changed in steel raw-material prices?

  • Iron ore fell 0.9% overnight to about 90 dollars per tonne, while Platts’ spodumene quotation rose 3.6% to 1305 dollars per tonne. The two raw materials’ short-term price trends diverged.
  • China’s hot-rolled coil price fell 1% overnight to 469 dollars per tonne; the US price was unchanged at 1292 dollars per short ton.

What pressures are weighing on Baosteel and Steel Authority of India’s profits?

  • Baosteel’s net profit attributable to shareholders for the third quarter of 2026 was 2.17 billion yuan, down 30% year on year and 8% quarter on quarter, but slightly above JPMorgan’s forecast. Revenue rose 1% quarter on quarter and gross margin held at 5.4%: lower unit costs, higher sales volumes and cost controls offset pressure from lower selling prices and higher coal costs.
  • JPMorgan expects Baosteel’s fourth-quarter earnings to come under pressure as support from export orders weakens and domestic demand remains soft. The bank sees no substantive progress on a nationwide production-cut policy and limited recovery in steel prices, and maintains a neutral rating on Baosteel.
  • Steel Authority of India’s adjusted EBITDA for the second quarter of fiscal 2027 was 42.2 billion Indian rupees, up 67% year on year but below JPMorgan’s forecast of 57 billion and the Bloomberg consensus of 44 billion rupees. Raw-material costs were higher than expected, and EBITDA per tonne of steel fell to 8200 Indian rupees from 10.7 thousand in the previous quarter; the company had previously guided for lower coking coal consumption costs in the quarter.
  • The company’s debt fell 5% quarter on quarter, but capital expenditure of 54 billion Indian rupees in the first half of the fiscal year was behind the pace implied by full-year guidance of 150 billion rupees; JPMorgan maintains a neutral rating.

Why did North American steelmakers perform better?

  • Nucor’s third-quarter steel business beat expectations, driven by higher prices and sales volumes; its raw-materials business remained under pressure. The company expects fourth-quarter earnings to be flat to slightly higher than in the third quarter, stronger than the market consensus previously forecast for mid-to-high single-digit sequential declines in revenue and EBITDA.
  • Gerdau’s third-quarter EBITDA was 3.8 billion Brazilian reais, up 9.9% quarter on quarter and 3.9% above JPMorgan’s forecast. North American earnings were strong, while the Brazilian business was supported by higher domestic flat-steel sales volumes and realized prices.
  • Gerdau’s North American order book at quarter-end was equivalent to 100 days, and its EBITDA margin reached 27.7%; however, South American EBITDA fell 21.9% quarter on quarter as costs rose. JPMorgan estimates the company generated positive free cash flow of 1.4 billion Brazilian reais in the quarter.

Why were Sandfire’s profits below expectations despite meeting its copper production target?

  • Sandfire produced 27 thousand tonnes of copper in the first quarter of fiscal 2027, in line with JPMorgan’s forecast; however, weaker zinc and by-product output brought copper-equivalent production to 38.9 thousand tonnes, 5% below the bank’s forecast. Unit costs at MATSA were also slightly above expectations because of currency and energy factors.
  • Quarterly revenue was 480 million US dollars and EBITDA was 272 million US dollars, respectively 5% and 9% below the bank’s forecasts. The company maintained its full-year production, cost and capital-expenditure guidance and plans to increase spending to accelerate drilling and studies at La Juliana and the A4 underground project.
  • JPMorgan cut its fiscal 2027 EBITDA forecast for Sandfire by 11%, while maintaining an overweight rating and adjusting its price target to 24 dollars per share.

Why is Perseus’s full-year production weighted toward the second half?

  • Perseus Mining’s first-quarter operating results for fiscal 2027 were broadly in line with JPMorgan’s expectations but 7% below market consensus; production for the June quarter listed in the report was 93 thousand ounces, 4% below the bank’s forecast.
  • The company maintained its full-year guidance and expects production to be weighted toward the second half: the Yaoure open pit will enter a higher-grade area, the CMA underground mine has achieved commercial production and will ramp up from the second through fourth fiscal quarters, and the Nyanzaga project is scheduled to begin production before January 2027.
  • JPMorgan maintained its neutral rating and raised its fiscal 2027 earnings forecast by 3%; the improvement from reduced material movement at Edikan was partly offset by a lower realized-price forecast more consistent with recent hedging arrangements.