Shares of steel companies drop again as analyst warns of continued risk in sector
September 9, 2008 - 1:56 p.m. NEW YORK (AP) - Shares of steel companies fell again Tuesday as an analyst forecast continued risk in the sector.
Analyst Melissa Cook at Calyon Securities said in an investor note Tuesday that the correction in steel prices gained momentum through August.
China's Baosteel is trimming prices in the fourth quarter on some products with other producers following, she said. She anticipates "further downside risk" in the fourth quarter, she said.
Soleil Securities Group analyst Charles Bradford said the sector is being hit by the contracting economy.
"The auto industry is on its backside. Machinery has been soft," he said in a phone interview. "Every market has been flat to soft this year except energy."
Furthermore, Bradford said the rising value of the dollar is "very harmful" to commodities, and some large shareholders are dumping steel stocks.
"I think there's clear sentiment against the group," he said. "Steel prices are starting to come down. Steel scrap started coming down in June and has been accelerating in recent days. Scrap fell off a cliff. That's a good leading indicator.
After falling Monday, shares of several companies dropped again Tuesday. AK Steel Holding Corp. was down $4.58, or 11.4 percent, to $35.68 in afternoon trading. US Steel slipped $8.57, or 8 percent, to $99.04, and Allied Technologies dropped $2.87, or 6.8 percent, to $39.09.