This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sector Snap: Steel Shares Slide

NEW YORK (AP) â¿¿ Shares of steel companies fell Monday on investor concerns that industry conditions will worsen as steel prices fall and demand for the metal slows in a weakening economy.

Demand for steel, a building block of industries from construction and manufacturing to energy, tracks conditions in the broader economy. With many countries in Europe in recession due to the government debt crisis and growth in China slowing, investors have grown increasingly worried about the health of the global economy.

This year is looking tough for steelmakers and it could get worse in the second half of the year, said Goldman Sachs analyst Sal Tharani in a Sunday note to clients.

Tharani noted that scrap prices tumbled this month, pointing to upcoming additional price drops. At the same time, overall steel supplies are high, both from U.S. mills and of imported steel.

The analyst said that while demand for steel has been stable, thanks to an uptick in automotive production and general manufacturing, economic data has softened recently. That's a bad sign for steel, used in manufacturing and construction. Tharani predicted that demand for steel will probably drop off in the summer, in part because that's a historically slower season.

Tharani cut Goldman's rating for AK Steel Holding Corp. to "Sell" from "Neutral" and reduced the price target for the company by $1 to $5, saying that hefty pension plan contribution requirements will result in negative cash flow at the company through 2014. In addition, the company has a large capital spending program, which also will pressure its balance sheet, he said.

In afternoon trading, AK Steel shares tumbled 76 cents, or 13 percent, to $5.04, after falling to an 8-year low of $5.02 earlier in the day. Shares have lost two-thirds of their value over the past 12 months.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%
TSLA $211.53 -4.96%
YHOO $36.94 2.61%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs