NEW YORK (AP) â¿¿ Shares of several metals and mining stocks fell Monday on predictions that they won't rise much higher and steel prices will soon fall.
J.P. Morgan analyst Michael Gambardella cut his ratings for U.S. Steel Corp., AK Steel Holding Corp., Cliffs Natural Resources Inc., Metals USA Holdings Corp. and Reliance Steel & Aluminum Co. to "Neutral" from "Overweight," noting that as a group the shares are have risen about 13 percent over the past week of trading, while the S&P 500 is only up about 2 percent.
Gambardella said he doesn't expect the gains to last.
"We don't think steel fundamentals are supportive of a continued move higher beyond this recent short covering and expect steel prices to decline soon," he wrote in a note to investors.Gambardella expects prices of hot-rolled sheet steel will fall further, noting that scrap prices appear overvalued especially when compared to iron ore, and they are set to drop. That, he said, would prompt some steel makers to cut prices. He added that some of the recent increases in steel prices might stem from increased buying ahead of possible strikes at U.S. Steel Corp. and ArcelorMittal. Still, both of those companies have reached tentative deals with workers, which could mean more cautious buying over the next several months, he said. In midday trading, U.S. Steel shares fell 68 cents, or 3 percent, to $21.67. AK Steel dropped 25 cents, or 4.3 percent, to $5.62. Cliffs Natural Resources fell $2.75, or 6 percent, to $42.80. Metals USA dropped 60 cents, or 3.9 percent, to $14.99, and Reliance Steel fell $2.20, or 3.8 percent, to $55.46.
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