SAO PAULO, Oct 21 (Reuters) - Shares of CSN , Brazil's largest steelmaker by market value, should rise thanks to the company's exposure to an upswing in iron ore prices, Barclays Capital said in a report on Wednesday.
Iron ore spot prices in China are firming, and volumes may be shifted from Asia to Europe as the global economy recovers, Barclays said. In this environment, suppliers such as CSN are winning pricing power, paving the way for an increase of 20 percent in iron ore prices next year, the bank said.
Mining accounted for 15 percent of CSN's revenue in the second quarter, down from 26 percent in the first quarter.
The bank raised CSN's share price target for the next 12 months by 6 percent to 70 reais, analyst Leonardo Correa wrote in a note to clients.
'In our view, CSN offers a combination of growth and resilience in its iron ore and steel business portfolios, providing a superior earnings outlook and return on invested capital potential,' Correa wrote.
CSN shares fell for a second straight day, shedding 0.3 percent on Wednesday to 61.01 reais -- well below Correa's target price.
CSN's assets include its Namisa iron-ore division, of which it owns 60 percent, and the Casa de Pedra mine, which might be listed in Brazil in coming months. CSN has been mulling selling a stake in Casa de Pedra since at least 2006.
CSN expects an increase of about 37 percent in its iron ore sales this year, Juarez Saliba, head of the iron ore unit, said on Aug. 7. CSN's iron ore sales, including its Namisa unit, are forecast to reach 25 million tonnes by the end of the year, compared with 18.2 million tonnes in 2008, he said.
(Reporting by Guillermo Parra-Bernal; editing by John Wallace) Keywords: CSN/BARCLAYS (guillermo.parra@thomsonreuters.com; Tel: +55 11 5644-7714; Reuters Messaging: guillermo.parra.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Iron ore spot prices in China are firming, and volumes may be shifted from Asia to Europe as the global economy recovers, Barclays said. In this environment, suppliers such as CSN are winning pricing power, paving the way for an increase of 20 percent in iron ore prices next year, the bank said.
Mining accounted for 15 percent of CSN's revenue in the second quarter, down from 26 percent in the first quarter.
The bank raised CSN's share price target for the next 12 months by 6 percent to 70 reais, analyst Leonardo Correa wrote in a note to clients.
'In our view, CSN offers a combination of growth and resilience in its iron ore and steel business portfolios, providing a superior earnings outlook and return on invested capital potential,' Correa wrote.
CSN shares fell for a second straight day, shedding 0.3 percent on Wednesday to 61.01 reais -- well below Correa's target price.
CSN's assets include its Namisa iron-ore division, of which it owns 60 percent, and the Casa de Pedra mine, which might be listed in Brazil in coming months. CSN has been mulling selling a stake in Casa de Pedra since at least 2006.
CSN expects an increase of about 37 percent in its iron ore sales this year, Juarez Saliba, head of the iron ore unit, said on Aug. 7. CSN's iron ore sales, including its Namisa unit, are forecast to reach 25 million tonnes by the end of the year, compared with 18.2 million tonnes in 2008, he said.
(Reporting by Guillermo Parra-Bernal; editing by John Wallace) Keywords: CSN/BARCLAYS (guillermo.parra@thomsonreuters.com; Tel: +55 11 5644-7714; Reuters Messaging: guillermo.parra.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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