NEW YORK (AP) ? The steel sector jumped in Monday trading with Credit Suisse seeing a better supply landscape at the start of the year, thanks to rising demand and better prices.
Domestic suppliers have grappled with weak demand because of the global economic slowdown. That situation has been worsened because of imports and new U.S. steelmaking facilities.
As a result, shares of steelmakers have been on the decline, which makes an investment in the sector even more compelling if Credit Suisse analyst Richard Garchitorena is right.
Garchitorena sees imports declining in December and January, just as demand is ready to pick up. He also notes that recent price hikes by steelmakers are holding, and that another increase could be on the way before the year is over.
There remains one big hurdle in the looming fiscal cliff, and a deal between President Barack Obama and GOP congressional leaders will be mandatory.
"While volatility will remain extreme heading into the 'fiscal cliff,' we believe steel stocks have already priced in some of the downside," Garchitorena wrote.
In late-morning trading, shares of United States Steel Corp. rose 97 cents, or 4.8 percent, to $21.03; Nucor Corp. rose 75 cents to $40.18; Reliance Steel & Aluminum Co. rose $1.47, or 2.7 percent, to $55.50; AK Steel Holding Corp. rose 7 cents, or 2.2 percent, to $3.65; and Worthington Industries Inc. rose 59 cents, or 2.7 percent, to $22.19.
Metals USA Holdings Corp. fell 14 cents to $14.30.
Source: http://news.yahoo.com/analyst-sees-better-conditions-steel-makers-165128825--finance.html
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