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MMX Mineração e Metálicos (MMXM3) reported 4Q adjusted EBITDA of R$45.4m, a decline of 41% sequentially, but ahead of the Street’s $19.0m forecast.  Iron ore sales totaled 1.9m tonnes, a decrease of 8% from 3Q and a 6% drop compared with 4Q 2010. Overseas volume accounted for 42% of the total, a higher percentage than the 2010 level of 33%. Management said the higher percentage of exports hurt margins, as the port tariff didn’t drop in step with lower export prices in the quarter.

Guidance was for relatively flat iron ore production in 2012 versus 2011 (7.5 million tonnes).  The company said 1Q production would be hurt by heavy rainfall, although lost production would be made up over the remainder of the year.

Our full report is available to subscribers only and provides further thoughts on the 4Q earnings report and conference call for MMX as well as the implication for the stock and other equities.

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Evraz (EVR) reported 2011 adjusted EBITDA of $2.90B, slightly below the Street’s $2.953B, but a 23% gain from 2010, on revenues of $16.4B, a 22% increase. Management attributed 92% of the revenue growth to price increases, while higher iron ore and coking coal prices led to EBITDA growth from the company’s Mining segment.

Guidance was for a modest increase in steel consumption in 2012, led by demand from emerging markets, with the market remaining volatile.  Evraz expects Russian construction steel demand to reach pre-crisis levels in 2012, with long product growth of 10%.

The company’s mills in Russia are running at 100%, while those in North America are running at 90%.

Our full report is available to subscribers only and provides further thoughts on Evraz Group’s full-year 2011 earnings report and conference call as well as the implication for the stock and other equities.

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ArcelorMittal (MT) raised sheet prices by $20/ton (or 3%) to $720/ton today, according to American Metal Market, fresh on the heels of mid-March price increases ranging from $30-50/ton from a number of domestic steel companies and MT’s  own move of setting its hot-rolled sheet prices at $700/ton.

We believe that at least a piece of the original price increase has been holding, and this second increase will support the first and is a typical pattern.

Our full report provides further thoughts about domestic and global steel prices as well as the implication for steel equities.

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Steel Market Production Cuts – Japan’s trade ministry has forecasted that steel output in Japan may fall by 1.9 percent for the quarter starting April 1 from the current quarter.

Steel Market Production Cuts – Steel output at a number of plants in Spain was disrupted yesterday due to a nationwide one-day strike that was participated in by 94% of the country’s metalworkers.

Steel Market Production Cuts – JSW Steel, India’s third largest producer has cut production at its largest plant, located in the Southern state of Karnataka, due to iron ore shortages resulting from government restrictions on iron mining in the area. The 10 million-metric-ton per year facility is operating at less than 70% capacity, compared with 90% in January.

Sources: Bloomberg, Steel Business Briefing

The number of active oil and natural gas rigs in the United States rose 0.6% to 1,979 for the week ending March 30, 2012. The rig count is up 11.4% from the year-ago level and is just 2.3% off the 2011 high of 2,026 for the week ending November 4, 2011.

The highest weekly rig count in the United States since 1940 was recorded on December 28, 1981, at 4,530; the lowest was recorded on April 23, 1999, at 488.

The number of rigs in Canada fell 27.3% to 256 this week from 352 the week before, marking the eighth straight decline. The drop puts the rig count 10.2% below the year ago period.

The highest rig count for Canada was 727 on February 3, 2006; the lowest was 29, recorded on April 24, 1992.

Source: Baker Hughes Inc.

The spot reference price for 62% Fe iron ore cfr North China rose to $147.60 on Friday, March 30, 2012, up 1.7% from last Friday’s $145.20, and a 3.2% increase for the month.  The price for iron ore rose to $147.70 on both March 28 and 29, the highest since October 18, 2011.

The post-recession low was $59.10 on March 27, 2009, while the high was $190.19 on February 17, 2011.

Source: The Steel Index

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We expect April prices for shredded and prime scrap to post either sideways or modest declines after coming in unchanged and down $12/ton for March.

We believe the main driver for any small declines is increased supply.  We believe that obsolete scrap flows have been much more liquid early this year when compared to the historical norm because of warmer weather, while prime scrap generation has improved meaningfully on the back of increased manufacturing activity – most notably for autos.

Our full report provides the drivers behind our scrap price forecast, our steel price outlook as well as the implications for steel equities.

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March prices for OCTG rose a nominal 0.1% to $1,916/ton versus February’s $1,914/ton, according to data released by Pipe Logix yesterday.  Prices for both seamless and electric-resistance welded (ERW) pipe saw increases of 0.1%, although the uptick was anything but broad-based as 24 out of the 39 individual products posted declines.

While drilling activity remains strong, March OCTG imports look set to reach a three-year high and new OCTG capacity continues to come online, so we believe supply may be starting to outpace demand.

Our full report is available to subscribers and provides further thoughts on OCTG pricing and margins as well as the implications for shares of OCTG producers.

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