U.S. Steel Corp., the country’s largest producer of the metal, rose the most in four weeks and bullish option trading jumped to a record on speculation that ArcelorMittal may be looking to purchase the company.
U.S. Steel climbed $2.27, or 4.8 percent, to $49.59 at 4:15 p.m. in New York Stock Exchange composite trading and earlier rose as much as 6.9 percent for the biggest intraday gain since July 20. More than 222,000 options to buy U.S. Steel shares changed hands, 10 times the four-week average and triple the number of puts to sell. The most-active contracts were August $50 calls, which surged ninefold to $1.01.
“There was unconfirmed speculation that ArcelorMittal may be looking to buy U.S. Steel,” said Caitlin Duffy, an equity options analyst at Greenwich, Connecticut-based Interactive Brokers Group Inc. “Options traders instantly gravitated to the August $50 calls right after the open.”
The possibility of an acquisition is unlikely, said Michelle Applebaum, who runs Chicago-based Michelle Applebaum Research. “The notion of ArcelorMittal buying U.S. Steel is as ill-founded a rumor I have ever heard,” she said in an e-mail.
There is “no way” the United Steelworkers union would allow a deal to proceed, Applebaum said, because it relies on U.S. Steel’s support for political and trade issues, which global companies with U.S. operations haven’t demonstrated.
ArcelorMittal would look for acquisitions of raw material companies instead of steelmaking operations, said Mark Parr, an analyst at Keybanc Capital Markets in Cleveland.
“Public commentary by Mittal would not lead people to believe that they’ll be acquiring,” Parr said in a phone interview. “It doesn’t seem very likely, and I would discount the authenticity of it based on public comments.”