In America Memorial Day weekends heralds the unofficial start of summer, and steelmakers ended May on an up note, as shares of US Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) all closed up Friday.
Apparently investors has decided to take the chance the recent boost in prices by steelmakers is sustainable, as the industry responds to price declines in prices in the North American market.
For flat-rolled steel, prices slid form a high of $800 a ton to about $780 a ton since April. Some of this is the result of supply-chain shortage that seem to have been worked through now.
The drop in prices resulted in Nucor, AK Steel and Steverstal boosting prices by close to $40 a ton.
With demand remaining weak, it's questionable by analysts whether the increase in prices will be able to hold. Industry capacity utilization at this time is only about 75 percent, a very average number.
Results in the second quarter should continue to be strong for steelmakers, but heading into the third quarter higher prices of scrap metal, coking coal and iron ore, along with an anemic so-called economic recovery, has generated concerns as to the strength of the industry.
For the next five years analysts see growth for the steel industry only at about a 5 percent rate at highers, with many thinking it'll be lower than that.
US Steel closed Friday at $45.67, gaining $0.33, or 0.73 percent. AK Steel closed at $15.29, rising $0.25, or 1.66 percent. Nucor ended at $42.09, jumping $0.20, or 0.48 percent. Steel Dynamics closed at $17.02, climbing $0.23, or 1.37 percent.
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