Ahead Of The Bell: Steel Sector

HARTFORD, Conn. (AP) — An analyst cut his earnings estimates for several steel makers Thursday, saying demand has remained low in March, though he believes profits could improve later this year.

"Early 2009 is shaping up to be more subdued as end-demand momentum remained tempered through March," wrote KeyBanc Capital Markets analyst Mark Parr in a note to investors.

Parr said profitability in the first and second quarters is unlikely due to the credit crisis, depressed pricing and higher cost inventories, "each of which has remained in place through March and will not likely significantly abate" before the end of the second quarter.

"Conversely, the industry has kept its focus on supply discipline over and above the demand destruction imposed by the credit miasma, supporting ongoing inventory de-stocking for both service centers and end users," he said.

His revised outlooks imply that first quarter earnings could "mark a trough" from which quarterly earnings could improve later this year, he said. However, visibility remains "well below normal," he said.

Parr said recovery in the sector depends heavily on increased auto production. The federal government's Term Asset-Backed Lending Facility is aimed at freeing up credit to increase consumer access to car loans, he said.