jjc7477

Steeling for the Downturn

Tell us something we don't know.

Can Steel Stocks Continue to Climb?

I'm in the steel service sector of the industry and am also long NUE, PKX and SLX. I typically import about 20% of my annual volume but over the past year this has shriveled to nothing. Every company buying steel in the US or Mexico is part of a captive audience: no where to go for relief due to the dollar, the high cost of ocean freight and fierce demand in other market.

I began to go long in February and believe we are looking at a trend that should last into 2009. Yes, the mills are facing increased raw material costs, but witnessed by Nucor's and SDI's purchase of scrap companies and Nucor's new pig iron operation plans, they are spending their new found wealth prudently and ultimately, these costs will become somewhat contained.