US Steel Shares Climb As Analyst Upgrades Stock

PITTSBURGH (AP) — Shares of United States Steel Corp. jumped Tuesday as an analyst raised his rating on the company's stock, predicting an upturn in production and demand.

Morgan Stanley's Mark Liinamaa upgraded the company to "Overweight" from "Equal-weight," with a $45 price target.

The fortunes of U.S. Steel, like other steel companies, have turned sharply lower since late last year, as the slowing world economy and credit crisis dragged down demand from steel's biggest markets: Construction, autos and industrial equipment. Prices have plunged from historic highs last summer, and production has dropped to levels not seen in decades.

In a note to investors, Liinamaa wrote that his firm expects production at domestic steel mills to climb to about 65 percent of capacity in the second half of 2009, from a recent rate of 46 percent.

Morgan Stanley expects a sequenced improvement in demand, led by autos in the third quarter and followed by manufacturing more broadly. Demand from the construction industry, meanwhile, is expected to lag, "as usual, due to the long-tailed nature of projects," Liinamaa wrote.