SOURCE: Research Driven Investing

Research Driven Investing

January 30, 2013 08:20 ET

Steel Industry's Rally Stalls as Goldman Analyst Downgrades Industry to "Cautious"

Research Driven Investing Provides Stocks Research on AK Steel and Nucor

NEW YORK, NY--(Marketwire - Jan 30, 2013) - The rally in U.S. steel stocks stalled Friday after a Goldman Sachs analyst lowered his view for the industry to "cautious" from "neutral." Analyst Sal Tharani has also lowered the ratings of AK Steel and Century Aluminum to "sell" from "neutral." Research Driven Investing examines investing opportunities in the Steel Industry and provides equity research on AK Steel Holding Corporation (NYSE: AKS) and Nucor Corporation (NYSE: NUE).

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Tharani predicts that ample supplies of steel will keep a lid on prices. Despite poor conditions global steel production rose to a record high of 1.55 billion metric tons in 2012, a year-over-year increase of 1.2 percent, according to numbers from the World Steel Association. The increase in production came largely from Asia and North America where production grew 2.6 percent and 2.5 percent, respectively. The European Union recorded a 4.7 percent drop as production totaled 169.4 million tons of crude steel in 2012.

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AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, infrastructure and manufacturing, construction and electrical power generation and distribution markets. The company has recently announced that they will raise prices for all carbon flat-rolled steel products by $40 per ton. Shares of the company have fallen over 11 percent in the past week.

With a production capacity that exceeds 27 million tons, Nucor is the largest producer of steel in the United States, and also North America's largest recycler. Nucor expects fourth quarter results to be in the range of $0.25 to $0.30 per diluted share, which is down from earnings of $0.35 per diluted share in the third quarter.

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