December 02, 2008

AK Steel leads way for US steel price increases

It is reported that a recent surge in US steel prices led by AK Steel Holding Corp has been getting mixed reviews from analysts as to whether the increases are a good move in today's unsure economy.

According to Purchase magazine, US prices for flat rolled steel on average jumped to USD 740 a ton in March from USD 655 per ton in February. However, AK Steel recently pushed the price to USD 1,000 a ton after raising prices for hot rolled steel by USD 150 a ton.

Other steel companies have been moving to follow suit, with ArcelorMittal announcing it will increase prices by USD 250 a ton on some steel shipments. US Steel Corp. is expected to make a similar announcement.

Mr Charles Bradford steel industry analyst of Bradford Securities of New York said that “This market has gone crazy. You'll probably see USD 1,000 a ton steel by June.”

But analysts from the financial site TheStreet.com said that stocks in the Market Vectors Steel ETF, which includes US Steel and ArcelorMittal, could be overvalued. The analysts pointed to the recent surges in steel stocks despite a weakening US economy as a potential concern for steel investors.

Ms Nancy Gravatt a spokeswoman for the American Iron and Steel Institute said that as long as the overseas demand for steel continues to increase, steel prices as well as US company values will remain high.