Ahead Of The Bell: Steel Shares Rise

HARTFORD, Conn. (AP) — Shares of United States Steel Corp. and other steel makers rose in premarket trading Wednesday as an analyst increased his investment rating on two steel stocks and said demand is rising for flat-rolled steel in U.S. markets.

Analyst Mark L. Parr of KeyBanc Capital Markets upgraded Pittsburgh-based U.S. Steel and Olympic Steel Inc. of Cleveland to "Buy" from "Hold."

Prices are rising for flat-rolled steel — a sheet-like product used in autos and appliances — into the June and July period as plants "begin to gradually re-engage the market," he said in a note to investors.

Parr also noted the dollar is weakening, boosting competitiveness of U.S. manufacturers. A weak dollar makes U.S. goods less expensive overseas.

He established a $47 price target for U.S. Steel and $25 for Olympic Steel.

But Parr downgraded Nucor Corp. of Charlotte, N.C., and Reliance Steel & Aluminum Co. of Los Angeles to "Hold" from "Buy."

The two companies have less business in the flat-rolled steel markets and "above-average exposure" to nonresidential construction, he said.

"While we view Nucor and Reliance Steel as market leaders with increasingly solid capital structures and positive long-term risk-reward ratios, we sense greater near-term upside in companies with more exposure to consumer-sensitive flat-rolled end markets," Parr said.

In premarket trading Wednesday, shares of U.S. Steel rose $1.39, or 3.7 percent, to $39.21. Nucor increased 50 cents to $48.26 and Olympic Steel jumped 68 cents, or 3.3 percent, to $21.