Anyone here ever look @ Steel Dynamics ??
Any thoughts on "where" they might shake out of this
steel debacle ????
EZ
STLD:
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Reuters, 11/21/2001 14:01
Steelmaker shares gain on shifting market prospects
NEW YORK, Nov 21 (Reuters) - U.S. steelmaker shares vaulted higher on Wednesday as investors measured prospects for stronger pricing and shifting market shares in the face of the likely closure of steel facilities at LTV Corp. (BB:LTVCQ)
Cleveland-based LTV, the fourth-largest U.S. steelmaker, on Tuesday said it is requesting a court's permission to shut down and sell its integrated steel unit, a move analysts said could open more of the struggling market to U.S. competitors and strengthen prices.
LTV's decision "is the most significant positive steel event in the past 20 years," a research note issued by JP Morgan analyst Michael Gambardella said on Wednesday.
Shares of No. 2 U.S. steelmaker Nucor Corp. (NYSE:NUE) and competitor USX-U.S. Steel Group (NYSE:X) both rose more than nine percent on Wednesday before paring gains, while shares of Steel Dynamics Inc. (NASDAQ:STLD), a flat-rolled steel producer, were more than six percent higher after earlier rallying as much as 10 percent.
LTV's move to shut down steel production, which Gambardella said accounts for nine percent of the domestic flat-rolled steel market, has prompted a big shift in the way investors view the steel industry, he told Reuters.
"Investors always think about capacity never dying," he said. But potential closures of operations at LTV, which filed for bankruptcy in December 2000, could allow its rivals to step in and fill that capacity.
Analysts agreed significant gains in rival steel stocks were expected in the wake of LTV's decision. Gambardella estimated the selling price of sheet steel could rise by 10 percent to 15 percent on the reduction in supply.
Steel prices are currently near post-war lows, due partly to an inflow of cheaply produced foreign steel imports over the past few years, steelmakers have said. Steep fixed costs, combined with the low prices, have forced steelmakers to spend their cash rapidly.
Too much excitement over the prospects for LTV's rivals may be premature, however, Salomon Smith Barney analyst Michelle Applebaum warned.
"For their competitors, the best-case environment is that they shut in three months, they liquidate the inventory that's there already, and that in the meantime, having announced that they're shutting, they're going to lose market share," she said.
LTV could become more aggressive with its pricing and undercut its competitors, however, Applebaum said. It's also possible that the company's steel workers will pressure it to find alternatives to shutting down the unit, she added.
Nucor's shares traded $1.47 higher at $47.07 on Wednesday afternoon, while USX-U.S. Steel shares were up 68 cents at $16.68 and Steel Dynamics stock gained 61 cents to trade at $10.95.
Copyright 2001, Reuters News Service
