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 per cent in afternoon trading, with AK Steel Holding up 3.6 per cent, Nucor Corp. up 1.1 per cent and United States Steel Corp. up 1.9 per cent. 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 2 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 per cent since mid-February, hitting a six-month low on Wednesday. By comparison, the S&P 500 has fallen just 5.4 per cent over the same period.