More To The Case For Rising Steel Stock Prices

Reuters has an article this morning that continues the story we have recently discussed regarding rising steel prices. The story begins with a qualifier of how steel prices, currently around $1,100-$1,150 per ton, may drop to $800-$900 a ton in the near future, but will probably not fall back to the $400 a ton that was priced last year. Nonetheless, pricing power remains. ArcelorMittal (MT) raised prices by $186 per ton, a 20% increase, raising prices $40 to $60 per ton for June and July, and has notified customers to expect the same increases in August. AK Steel Holding (AKS) raised spot prices for carbon steel products $150 per ton. The CEO of U.S. Steel Corporation (X) sees flat-rolled steel prices in Q2 rising as much as $300 per ton higher, or 50% higher than the average Q1 price of $646 per ton.

Yet, not all analyst see blue skies. Peter Marcus of World Steel Dynamics believes that eventually steel makers will be unable to pass along raw material price increases, and that banks will begin refusing to finance inventories at these prices. Ironically, this may be a plus for U.S. steel makers since rising steel prices, and dollar issues, have made them more cost effective while making foreign imports less attractive. This is good news for U.S. steel. For additional information on U.S. companies, seekingalpha.com has a nice article written a few weeks ago by William Ellard that discusses a few of the smaller steel companies. It is worth a read. You can also check out my original article here or here.