LONDON (ShareCast) - (Sharecast News) - JP Morgan upgraded Evraz to 'overweight' as the bank admitted it had been too gloomy about the prospects for steel companies.
The outlook for global steel companies improved markedly in the second half of 2020, JP Morgan said. Benchmark prices are 80-150% higher than their lows based on better than expected demand and surprisingly constrained supply, the bank added.

Prices will peak in the first quarter but the gap between iron ore and steel prices could stay solid, analyst Luke Nelson and colleagues said. They advised investors to be choosy when seeking to capitalise on this trend after the exhaustion of "easy wins".

"We acknowledge we were too conservatively positioned into YE'20, but have to play the field as we see it," Nelson wrote in a note to clients. "The upside is now more nuanced especially as scrap prices have recently turned, but alpha can still be generated with stock selection."

In a series of rating changes Nelson upgraded Evraz from 'neutral' and increased his price target to 650p from 510p. He also raised ArcelorMittal to 'overweight' from neutral and boosted Finland's Outokumpu to 'overweight' from 'underweight'. He switched his ratings on Aperam and MMK to 'neutral' from 'overweight'.

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