By David Berman
It’s a sea of red out there on Friday as investors recoil from anything with exposure to the global economy. But steel producers? They can’t get enough of them.
The S&P 500 steel index was up 0.8% in afternoon trading, with AK Steel Holding (NYSE:AKS) up 3.6%, Nucor Corp. (NYSE:NUE) up 1.1% and United States Steel Corp. (NYSE:X) up 1.9%. The Wall Street Journal’s MarketBeat pinned the against-current swim to some belief among observers that the recent decline in steel prices has bottomed out.
Morgan Stanley said on Thursday: “We think market fundamentals (for steel) will begin to turn up by the end of the summer, so any further weakness would be short-lived.”
And Michelle Applebaum, managing partner at Chicago-based Steel Market Intelligence, provided some details on recent price increases: ““According to steel buyers we speak with, Nucor has followed Gerdau’s price increase for beams, where pricing had dropped $80/ton two weeks ago in a sudden move led by Steel Dynamics. Nucor has told customers via letters that beam base prices will rise $15/ton and the beam surcharge will rise $15/ton.”
Friday’s bounce by steel stocks comes after a steady decline that makes the recent downturn by the broader market look like nothing. The S&P 500 steel index has fallen nearly 20% since mid-February, hitting a six-month low on Wednesday. By comparison, the S&P 500 has fallen just 5.4% over the same period.