JP Morgan's Preview of North American Metals & Mining Earnings: Q4 Guidance and Lagging Pricing in Focus; Favorable Outlook for Carpenter Technology (CRS.US)

According to Zhitong Finance APP, JPMorgan pointed out in its latest North America Metals & Mining Weekly Report that this week marks the peak of the earnings season for metals companies, with several steel and metal enterprises set to release their financial results consecutively. The research report provides the latest ratings and target prices for several core stocks, and notes that in August, apparent steel consumption in the U.S. increased by 7% year-on-year, although inventory and supply-demand dynamics varied significantly across different product categories.

Steel & Metal Companies Earnings Preview: Focus on Q4 Guidance and Lagged Pricing

JPMorgan noted that this week will see a concentrated release of financial results from multiple metals companies. Cleveland-Cliffs (CLF.US) will report on October 19, Steel Dynamics (STLD.US) on October 20, Carpenter Technology (CRS.US), Kaiser Aluminum (KALU.US), and Reliance (RS.US) on October 22, and GrafTech (EAF.US) on October 23.

Key highlights and ratings for each company are as follows:

Cleveland-Cliffs (Neutral rating, $12 target price): The company is expected to provide robust Q4 guidance (JPMorgan forecasts 11% above market consensus), though the buy-side has largely priced this in. The market will closely watch for comments on contract resets and Canadian pricing, as these are key drivers for the prior $3.3 billion full-year EBITDA target (JPMorgan forecasts $2.8 billion, 14% above market consensus).

Steel Dynamics (Neutral rating, $260 target price): The focus is on the performance of the aluminum division ADI. As the business is still ramping up and scrap metal price spreads have recently compressed, management is unlikely to introduce new profit targets at this time.

Carpenter Technology (Overweight rating, $520 target price): Driven by a seasonally strong product mix, Q1 results are expected to be solid; however, given the currently challenging investor sentiment, visibility on acceleration of structural orders is worth monitoring.

Reliance (Neutral rating, $400 target price): Q3 results are expected to beat guidance (JPMorgan forecasts 9% above company guidance), and Q4 guidance will likely exceed market expectations (JPMorgan forecasts 4% above consensus), mainly supported by spot pricing leverage, increased market share, and diminishing seasonal headwinds.

Kaiser Aluminum (Underweight rating, $146 target price): Estimates indicate a lagged metal gain of at least $10-15 million in Q3, but Q4 outlook is relatively subdued due to seasonal factors and a loose primary aluminum fundamental backdrop.

GrafTech (Underweight rating, no target price set): Lagged pricing is expected to deteriorate in Q3, despite recent price increases. After disappointing developments in India's anti-dumping duty, attention turns to progress in 2027 U.S. customer contract negotiations.

Strong Apparent Steel Consumption

The report shows that in August, U.S. apparent steel consumption (a measure of actual demand, equal to production plus net imports) was strong, with the following details:

Total: Overall apparent consumption rose 7% year-on-year (+614,000 tons), flat month-on-month. This was mainly driven by both shipments (+6% YoY) and imports (+12% YoY).

Sheet Products: Apparent consumption increased 7% YoY (+309,000 tons), also driven by shipments (+6%) and imports (+12%).

Plate: Apparent consumption grew 9% YoY (+63,000 tons), up 11% month-on-month.

Rebar: Apparent consumption rose 8% YoY (+67,000 tons), mainly driven by a surge in imports (+147%).

Shapes: Apparent consumption jumped 19% YoY (+124,000 tons), supported by both imports (+114%) and shipments (+8%).

The report notes that the World Steel Association forecasts U.S. steel demand to rise by 2.0% in 2026, slowing to 1.5% in 2027, with growth mainly driven by non-residential projects such as data centers and energy infrastructure.

In terms of inventories, September service center sheet inventory slightly picked up to 45.9 shipping days (previous value 44.2, 54.3 in the same period last year); plate inventory dropped sharply to 40.5 shipping days, the lowest since records began in 2018 (previous value 45.5, 58.7 in the same period last year).

Aluminum Industry: Downside Risk for Scrap Can Price Spreads

In the downstream aluminum sector, JPMorgan believes the risk/reward for used beverage can (UBC) price spreads is skewed to the downside, due to a loose primary aluminum fundamental backdrop and growing UBC demand. The Oswego plant resumed operations in June, ADI aims for about a 90% exit rate by fiscal 2026, and Novelis’s Bay Minette project has started to ramp up — all suggesting increased demand for U.S.-sourced can stock, which in turn adds to UBC input demand. In addition, should Canada face heavy S232 tariffs (in a worst-case scenario), this could significantly dampen Midwest aluminum price sentiment.