Steel stocks took a beating all week, as US Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and Arcelor Mittal (NYSE:MT) stock charts all looked like you were going down a mountain. One exception was Gerdau S.A. (NYSE:GGB), which while losing share price during the week, wasn't as pronounced as the others.
All of this is based on the economic sovereign debt crisis in Europe, as well as the belt tightening of China, which will result in lowered demand for steel, and is also lowering the price of iron ore.
US Steel is particularly exposed to Europe, which could cause them problems in the long run, as that's a challenge that isn't going to go away any time soon.
US Steel finished the week at $41.99, down Friday by $3.29, or 7.27 percent.
The week for AK Steel ended at $13.34 a share, down on Friday by $1.14, or 7.87 percent.
Nucor ended the last five trading days at $40.93, dropping on Friday by $1.61, or 3.78 percent.
For Arcelor Mittal, they came in at $27.50 for the end of the week, plunging on Friday by $1.63, or 5.60 percent.
Gerdau S.A. finished the trading week at $13.01, down $0.64 on the day, or 4.69 percent.
With this precipitous weekly drop in steel stocks, there is sure to be a rebound based on that and nothing else, the reason why some say they like the stocks now.
That's primarily based on current valuations and not related to fundamentals and the macro-economic realities they're facing.
Long-term the steel industry and companies heavily exposed to it should struggle, especially those with heavy exposure to Europe, which is guaranteed to be a slow economy for some time to come, if not poised to go back into a recession, if they're not already there.
China's different only in the clarity isn't there yet as to how the austerity measures they're taking will impact the steel and other industries.
While China will no doubt continue to grow, it won't be at the 12 percent or higher rates it has been in the recent past. More than likely it'll start to come down to a more reasonable 7 to 8 percent rate in the near term.
With the U.S. economy about level at this time, and the combination of Europe and China, it'll have a dramatic impact on the commodity sector in general, and steel industry specifically.
Showing posts with label Gerdau. Show all posts
Showing posts with label Gerdau. Show all posts
Saturday, June 5, 2010
Friday, May 7, 2010
Nucor (NYSE:NUE) Acquiring Companies, Own Shares
Nucor (NYSE:NUE) seems to be getting on surer footing in a tough steel market, as residential and non-residential construction markets continue to be tough.
Expansion through acquisition and acquiring shares in their own company has been much of the focus recently, as they prepare for what they hope is an upswing in the steel market.
Nucor has increased production at their steel mills from last year, and is looking for an even better quarter than the the first quarter.
Along with competitor Gerdau Ameristeel (NYSE:GNA) (TSE:GNA), they've also commited to keeping prices for wide-flange steel beams where they're at now, as they want to continue the industry on a more even keel, after several years of extreme challenges.
Expansion through acquisition and acquiring shares in their own company has been much of the focus recently, as they prepare for what they hope is an upswing in the steel market.
Nucor has increased production at their steel mills from last year, and is looking for an even better quarter than the the first quarter.
Along with competitor Gerdau Ameristeel (NYSE:GNA) (TSE:GNA), they've also commited to keeping prices for wide-flange steel beams where they're at now, as they want to continue the industry on a more even keel, after several years of extreme challenges.
Monday, January 12, 2009
Falling Commodity Prices Push Brazilian Stocks Down
Bovespa plunges as falling commodity prices put pressure on the Brazilian stock market.
As commodities go, so goes Brazil, and that has been shown again to be true as falling commodity prices pushed the Bovespa to its lowest levels since November 21, 2008, dropping 2,179.47 to 39,403.47, a 5.2 percent loss.
That effectively wiped out half of the gain since the beginning of the year. Much of the rise in the first part of the year was from the illusion the stimulus plans implemented around the world would push up the demand for commodities, which Brazil relies so strongly on.
Even so, long term Brazil will do well, as sooner or later the need for commodities will kick in and override the fears permeating the global markets at this time. As far as the near term, many are starting to believe the optimism was highly exaggerated, and things will take longer to recover than thought.
In 2008 the Bovespa went off the cliff by 41 percent, but had a brief surge since the beginning of 2009.
Vale, Rio Tinto Group, Gerdau and Petrobras, among many others, all participated in the big decline today.
Raw materials and oil make up 54 percent of the MSCI Brazil Index.
When it comes down to it, investors don't believe countries are anywhere near ready to invest heavily in commodities, so they're pulling back until they are convinced to the contrary. That'll take some time.
As commodities go, so goes Brazil, and that has been shown again to be true as falling commodity prices pushed the Bovespa to its lowest levels since November 21, 2008, dropping 2,179.47 to 39,403.47, a 5.2 percent loss.
That effectively wiped out half of the gain since the beginning of the year. Much of the rise in the first part of the year was from the illusion the stimulus plans implemented around the world would push up the demand for commodities, which Brazil relies so strongly on.
Even so, long term Brazil will do well, as sooner or later the need for commodities will kick in and override the fears permeating the global markets at this time. As far as the near term, many are starting to believe the optimism was highly exaggerated, and things will take longer to recover than thought.
In 2008 the Bovespa went off the cliff by 41 percent, but had a brief surge since the beginning of 2009.
Vale, Rio Tinto Group, Gerdau and Petrobras, among many others, all participated in the big decline today.
Raw materials and oil make up 54 percent of the MSCI Brazil Index.
When it comes down to it, investors don't believe countries are anywhere near ready to invest heavily in commodities, so they're pulling back until they are convinced to the contrary. That'll take some time.
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