JPMorgan says Baosteel and Steel Authority of India face cost pressures, while Nucor and Gerdau benefit from prices and sales volumes. Both miners maintained their full-year guidance, but each had shortcomings in its quarterly performance.
Overnight copper prices tracked by JPMorgan rose 1.9%, while iron ore rose 0.8%. At the company level, third-quarter profits at CMOC Group and Zijin Mining both fell quarter on quarter. Whitehaven’s production exceeded expectations, but some sales were delayed, while Newmont faces cost and capital expenditure pressure next year.
JPMorgan believes steelmakers can still benefit from price pass-through in the fourth quarter, although leading indicators for construction are weakening. Demand and earnings performance vary across aluminum processors, while gold equities require a comparison of costs, valuations and the timing of growth delivery.
Morgan Stanley favours the scarcity of copper resources and improving pricing for European steelmakers, but recovering aluminium supply, high valuations and project execution risks make stock selection more important than a broad bullish view on metals.
