There is a very strong correlation between Sims Metal Management’s buy and sell prices and the prices of iron ore and coking coal, and ferrous prices on the London Metals Exchange, said Sims’ managing director and chief executive officer, Galdino Claro, at the company’s annual general meeting.
The company has withdrawn guidance because of the unknown impact on scrap demand and activity. Credit Suisse notes the positives include a strong balance sheet, with limited draw on working capital under the current trading conditions.
The company expects the first half result to be "materially lower" than the prior corresponding first half. This earnings warning comes soon after the FY19 results where, Credit Suisse points out, management had highlighted macro headwinds stemming from the US/China trade war, low Turkish steel demand and soft automotive demand.