Editor's note: The following article is part of a series on analyst ratings of metals stocks. Here is an earlier article that looks at ratings of copper and aluminum stocks.
NEW YORK (
) -- Analysts could be bullish on steel stocks for the remainder of 2010 because of demand concerns and the offsetting effect of bargaining opportunities.
The key triggers for steel stock ratings changes during the second half will be data provided by American Iron and Steel Institute (AISI) regarding capacity utilization and production at U.S. steel mills, second-quarter earnings of steel companies and economic data from the U.S.
During the first half,
(X - Get Report)
led the pack of steel stocks receiving improved ratings. Analysts favored
steel producers with captive raw materials
, in view of the hike in iron ore prices during the second quarter.
Schnitzer Steel Industries
(SCHN - Get Report)
(STLD - Get Report)
(NUE - Get Report)
(WOR - Get Report)
received stock upgrades during the first half of the year due to rising steel consumption and higher utilization rates in the U.S.
For the period from Dec. 29 to June 21, capacity utilization rates for steel mills in the U.S. increased to 74.8% from 60.6% while production was up 25.1% to 1.80 million tons from 1.45 million, according to data released by AISI.
(MT - Get Report)
received analyst downgrades during the past six months.
Because Ternium and ArcelorMittal derive a majority of revenue from Europe, analysts downgraded these stocks on concerns about the European debt crisis. However, ArcelorMittal received a moderate downgrade, since
the company is self-sufficient in iron ore and coking coal supply
through long-term contracts with iron ore majors such as
Cliff Natural Resources
a metal stock pick for 2010
AK Steel was downgraded on concerns that the company did not take into account
higher iron ore prices for its second-quarter order book