Skip to main content

NEW YORK (TheStreet) -- Steel executives are spooked.

At least, that's how it looks according to the results of a new survey of steel-industry C-suites in North America, compiled by

The Steel Index

, a Pittsburgh-based industry data provider.

>>Four Steel Stocks and How to Trade Them

According to the survey, conducted weekly, 83% of executives now believe that prices for plain carbon steel will weaken over the next three months. That's a precipitous jump in negativity from last week, when 69% of the industry's topsiders were expecting softer prices. The Index's survey queries some 500 managers throughout the steel supply chain, including mills, distributors, service-center operators and steel end users.

If these managers are right, it would mean more difficult times for a sector still struggling mightily to emerge from the recessionary doldrums, with profits squeezed on the one hand by rising raw materials costs and on the other by customers unwilling to accept price hikes.


outlook for steelmakers

has indeed dimmed:

Steel Dynamics

(STLD) - Get Steel Dynamics, Inc. Report



(NUE) - Get Nucor Corporation Report


Scroll to Continue

TheStreet Recommends

AK Steel

(AKS) - Get AK Steel Holding Corporation Report


reduced earnings estimates

in recent weeks to account for the squeeze.

Steelmakers outside the U.S. have also had a tough time: South Korea's Posco, for instance, disappointed investors when it reported a 9% decline in earnings for its third quarter, mostly because of dearer raw materials costs. The switch to a short-term iron ore contract between world steelmakers and their mining company suppliers has resulted in rising costs for the mills.

Unsurprisingly, stocks in the sector in the U.S. have been caught in a range since July. Even the vertically integrated

U.S. Steel

(X) - Get United States Steel Corporation Report

, which controls its own raw materials sources, hasn't performed well. Its stock hasn't traded above $50 since May and remains in idle, 37% below its year high of more than $70.

This week's increase in bearishness comes as some steel experts have predicted a global tightening in supply -- and thus a global rise in prices. The rationale behind that scenario was that China, home to the world's largest steelmaking industry, was in the midst of shuttering a bunch of its old, energy-inefficient, high-polluting mills, thus taking offline some portion of its total capacity.

It's true that certain categories of the steel business in the U.S. have improved, albeit mildly: appliances and automotive, for example, continue to rebound. But the construction segment, one of the largest steel end markets in North America, has all but ceased to exist. Until the nation starts erecting structures again, steel stocks won't rally, analysts say.

On Thursday, steelmaker shares were mostly lower. AK Steel was falling 2.4% to $14.27, Steel Dynamics was down 1.2% to $14.58, Nucor was slipping fractionally to $39.97, and U.S. Steel was losing 1% to $44.37.

-- Written by Scott Eden in New York


>>Four Steel Stocks and How to Trade Them

>>Best in Class: Steel Dynamics

>>Steel Stock Bears Continue to Emerge

>To contact the writer of this article, click here:

Scott Eden


>To follow the writer on Twitter, go to


>To submit a news tip, send an email to:


Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.