A XP Investments projects a more balanced scenario for most sectors of mining, steel industry e Paper And Cellulose in 2022.
After a robust performance in 2021, mainly by steelmakers, the brokerage believes that the market will see more moderate prices next year, with limited downside risks in a context of Gross Domestic Product growth (START) global still strong, expansionary policy and rising costs.
To iron ore, analysts expect prices to remain at current levels amid demand for steel stable in China compared to 2021.
“We don’t expect new major stimulus plans from the government as in the past”, comment André Vidal and Thales Carmo, in a report updated last Thursday (2).
In XP’s opinion, China’s iron ore purchases should start to normalize after the Winter Olympics.
Standardization in steel mills
Steelmakers experienced a high-price environment in 2021, leading to record cash generation. For 2022, demand in Brazil is expected to benefit from a gradual recovery, led by the construction sector.
According to XP, long steels will maintain good performance, while flat steels will be pressured by the shortage of semiconductors.
The recent drop in steel prices is also likely to impact steelmakers’ results next year.
Cellulose can surprise
While the market is concerned that hardwood pulp in China is at risk of further decline, XP thinks prices could surprise.
Some reasons explain the broker’s optimistic view: (i) curves of start-up e rampup lower than expected, along with unanticipated capacity closures; (ii) still healthy demand, driven by GDP growth; (iii) supply restrictions affecting pulp producers that depend on the import of wood chips; and (iv) elevation of the marginal cost curve.
XP projects for hardwood pulp an average of US$ 580 a ton in 2022, which, “along with the real at devalued levels, should keep the margins of Brazilian pulp producers healthy”.
On the other hand, the scenario of packaging paper producers, which registered one of the best years in 2021 due to digital and sustainability trends, should be calmer, with the best time being left behind.
preferred shares
Despite not seeing any new spikes in value, XP indicates buying the stock in Vale (VALE3) yes CSN Mining (CMIN3), with preference for the first.
“We see upside potential in terms of valuation, in addition to the payment of hefty dividends and share buybacks for Brazilian mining companies”, explain Vidal e Carmo.
Among the steel companies, the preference goes to Gerdau (GGBR4), given its exposure to long steel. XP has a buy recommendation for the company’s preferred stock. For Usiminas (USIM5), O rating it is neutral.
In pulp and paper, XP follows with a purchase recommendation for Klabin (KLBN11), but it is downgrading the indication of the Irani (RANI3) to neutral.
Another action commented on by the broker is the CBA (CBAV3), with purchase recommendation. In the opinion of analysts, the global deficit in the industry of aluminum will maintain high material prices and premiums, which also benefit from rising energy costs around the world.
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Source From: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
