Steel Shares Rise As Analyst Points To Spending

PITTSBURGH (AP) — Steel shares climbed Monday as an analyst said makers of the metal should benefit from expected government infrastructure spending and apparent economic growth in China.

In a note to investors Sunday, Goldman Sachs analyst Sal Tharani added Gerdau Ameristeel Corp. to his firm's Americas Conviction Buy List, raising the Tampa-based company's target price to $8 from $5.50.

"We expect infrastructure spending to be a meaningful driver of steel demand in coming months," he wrote. "This segment could be the brightest spot in steel demand as we enter the second half of this year. Gerdau, with the highest exposure to infrastructure spending, should benefit the most, in our view."

Nucor Corp., Commercial Metals Co. and Steel Dynamics Inc. "should also benefit from higher infrastructure spending" under the American Recovery and Reinvestment Act, Tharani wrote.

The analyst also wrote that investors could "look beyond the valley" of very depressed 2009 earnings.

"We also believe that recent positive data out of China could drive improved sentiment and fundamentals for steel stocks," wrote Tharani.