Steel Shares Traded in U.S. May Advance on Chinese Demand, Barron's Says
U.S. Steel Corp., Nucor Corp., Steel Dynamics Inc. and AK Steel Holding Corp. are at “attractive” prices and the stocks may rise if demand in China increases and the global economy avoids another slowdown, Barron’s reported.
Steelmakers’ shares have been struggling after reaching 52- week highs earlier this year, as investors grow wary of the European debt crisis and its potential effect on the economy, the weekly newspaper said in its June 21 edition. The decline may have created a buying opportunity, Barron’s said.
Michelle Applebaum, an independent analyst in Chicago, told Barron’s that steel prices may reach a new high “within the next 12 months” as “the commodity hunger that China has isn’t going to go away.” Applebaum told Barron’s that China’s gross domestic product growth rate is unlikely to drop below 5 percent, even as the government tries to slow the nation’s economy and its steel-intensive construction industry.
U.S. Midwest hot-rolled coil steel fell to $680 a metric ton from $740 in April, signaling excess supply concerns, Barron’s said. Analysts have worked further price declines into their forecasts accordingly, and steel shares “reflect this new perception,” Barron’s said.