Steel producers' shares fall on expectations that product prices are headed lower
NEW YORK (AP) -- Shares of steel makers tumbled Wednesday amid expectations that demand for their products will fall in Europe and North America.
Goldman Sachs analyst Sal Tharani, in a client note about United States Steel Corp., warned about "deteriorating European and U.S. markets and our expectations of declining ... prices" for the steel pipes used in drilling for crude oil and natural gas.Many of the day's biggest stock price declines came in shares of steel producers that rely less on the spot market for scrap metal.
"Mini-mills (like Nucor Corp.) are better positioned in the near term than integrated steel makers, in our view, due to their variable cost structure as scrap prices have declined more than steel prices," Tharani said, mentioning US Steel as an example of an integrated steel producer.
He cut his price target on US Steel shares to $42 from $56, downgraded the shares to "Sell" from "Neutral" and added the stock to his "Americas Conviction Sell" list.
In late morning trading, US Steel shares fell $4.47, or 11 percent, to $37.88, Nucor was off 56 cents to $35.50, Steel Dynamics Inc. declined 88 cents, or 8.2 percent, to $9.86 and AK Steel Holding Corp. gave up $1.19, or 8.5percent, to $12.77.
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