NEW YORK (TheStreet) -- Shares of the Brazilian steel maker and iron-ore mine owner Gerdau SA (GGB) fell to a 52-week low of $3.56 today on heavy trading volume after JPMorgan said iron-ore prices will extend declines as growth in low-cost supply from the world's largest producers outstrips demand, cutting forecasts through 2017, Bloomberg reports.
Gerdau's iron-ore division posted far weaker results in the third quarter of 2014 than in the year-ago period, reflecting the drop in prices, the Wall Street Journal said. The division's Ebitda margin sank to just 4.8% in the third quarter of this year, compared with 39% a year earlier, and that compared with a company-wide Ebitda margin of 16.5%, the Journal added.
Ebitda margins of the division could shrink even more in light of JP Morgan analysts' estimates that the steel-making raw material will average $67 a metric ton next year, 24% less than previously forecast, and $65 in 2016, down 23%, according to the report, Bloomberg said.
So far this year, iron-ore has averaged $98.82 a ton, according to data from Metal Bulletin Ltd.
About 9.22 million shares changed hands by 3:20 p.m. in New York, compared to the average of 6.02 million shares.
Separately, TheStreet Ratings team rates GERDAU SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: