Trump Tariffs Are a Boon for This French Steelmaker

Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts

(Bloomberg) -- Amid the global selloff in steel and aluminum stocks, reeling from U.S. President Donald Trump’s plan to impose tariffs on imports, one French steelmaker may be rubbing its hands in glee.

Shares of Vallourec SA climbed as much as 4.9 percent on Friday as European peers including Voestalpine AG, Outokumpu Oyj, ArcelorMittal and SSAB AB slumped.

The “large majority” of Vallourec’s sales in North America are produced domestically, giving the Boulogne-Billancourt-based company the capacity to melt its own steel as well as complete rolling and finishing,” Nicolas De Coignac, senior vice president of the company’s North American operations, said on a Feb. 21 conference call with analysts.

Morgan Stanley analysts upheld their overweight rating on the stock on Friday and the 11 euros-a-share price target -- a Street high -- saying Vallourec is a beneficiary. While the full details of Trump’s measures haven’t yet emerged, the analysts see the tariffs increasing prices of oil-country tubular goods (OCTG) in the U.S.

“With the U.S. importing 50 percent to 60 percent of its OCTG consumption, and demand growing due to shale oil growth, we believe such actions would create a tighter market with a higher clearing price for OCTG,” the analysts said. “We think Vallourec should benefit given its 750,000 tons of production capacity in the U.S.”

The shares traded up 3.8 percent at 4.74 euros as of 9:56 a.m. in Paris

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Stock Market News on BloombergQuint
Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts