Seeking Alpha: The Going's Tough, But Steel Dynamics Still Going

As Chinese steel mills continue to throw steel into the export market, producers like Steel Dynamics (NASDAQ:STLD), Nucor (NYSE:NUE), and ArcelorMittal (NYSE:MT) are finding it difficult to make much headway with their own operations. I liked Steel Dynamics on a relative and absolute basis back in February, and I'm happy to say that the shares have risen more than 10% since then - beating out other producers' stocks by a pretty healthy margin (Nucor down about 4%, ArcelorMittal down about 7%, and Gerdau (NYSE:GGB) down more than 40%).

I believe Steel Dynamics is faring better due to its better free cash flow generation profile, its stronger EBITDA/ton, its decision to curtail Mesabi Nugget, and its leverage to opportunities in fabrication and higher-value products like rail. I do still believe the shares are undervalued, but there's no shortage of cheap-looking steel stocks and it is hard to see how steel prices will improve when low coal and iron ore prices, not to mention government subsidies, continue to encourage Chinese mills to export more and more steel.

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The Going's Tough, But Steel Dynamics Still Going