Steelmakers stood out as one group of stocks that mostly missed out on Tuesday’s broad rally, and a contributing factor may have been a report that the global steel industry could face writedowns of as much as $518B in stranded assets over the coming years because it is still building traditional blast furnaces, as reported by the Financial Times.
Potentially relevant tickers include (NYSE:MT), (NYSE:X), (NYSE:CLF), (NUE), (STLD), (RS), (SLX)
Countries have continued to announce new coal-based plants while at the same time setting tougher pledges to lower emissions, according to Global Energy Monitor, and as a result, coal-powered blast furnaces could become unnecessary or inoperable over time, leaving the sector with stranded assets worth $345B-$518B.
The forecasts are well above previous estimates that see the stranded asset risk for the industry at as high as $70B.
The global shift from traditional blast furnaces to electric arc furnaces is “too slow” and “dangerously behind” decarbonization targets described in the International Energy Agency’s net zero 2050 report, the report also said.
ArcelorMittal’s (MT) free cash flow trends are aligned with bullish technicals, Individual Trader writes in a bullish analysis published on Seeking Alpha.