Analyst Predicts Domestic Steel Prices Will Climb

Goldman Sachs analyst said supplies of steel are low domestically and he's surprised demand isn't higher.

NEW YORK (AP) — Shares of steel producers rose along with other industrial metals miners and the broader market Tuesday, while a Goldman Sachs analyst predicted domestic steel prices would climb.
Goldman Sachs analyst Aldo Mazzaferro in a client note said supplies of steel are low domestically and he's surprised demand isn't higher. Weak automotive and industrial production likely are weighing on steel demand, he wrote.
''However, the opposite conditions prevail globally, where steel demand is very strong and is expected to remain so given large global infrastructure needs,'' the analyst noted.
Mazzaferro said he expects a need to restock domestic inventories will drive a modest steel price recovery in the near term.
Meanwhile, broader concerns with the credit market have weighed sharply on steel equities, the analyst wrote. This has created good investing opportunities especially with stocks such as Nucor Corp., Steel Dynamics Inc., Commercial Metals Co. and Reliance Steel & Aluminum Co., which could rise about 30 percent in the next 12 months, the analyst wrote.
Shares of steel producers have suffered during a broader market downturn stemming from a lack of available of credit. Investors became concerned that the credit pinch could crimp economic growth, which could affect steel demand.
Shares of steel producers rose modestly in midday trading Tuesday.
Nucor Corp. shares rose 48 cents to $53.77, Reliance Steel & Aluminum Co. shares added 80 cents to $52.80 and United States Steel Corp. shares climbed $1.15 to $92.20.
AK Steel Holding Corp. shares picked up 69 cents to $39.03 and Allegheny Technologies Inc. shares rose 81 cents to $93.05.
Steel Dynamics Inc. shares added 68 cents to $42.38. Worthington Industries Inc. shares rose 19 cents to $20.84 and Commercial Metals Co. shares rose 51 cents to $28.36.
Shares of Chaparral Steel Co., which agreed to a $4.22 billion buyout from Gerdau Ameristeel Corp. in July, edged up 6 cents to $85.82.
Arcelor Mittal shares rose $2.43, or 3.9 percent, to $64.75. The company on Friday said it plans to increase steel shipments by more than 20 percent from 2006 to 2012 as it pushes into Latin America, Africa, Eastern Europe, Russia and central Asia.
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