July 10, 2008
Steelmakers’ Stock Drops
By Jessica Heffner, Middletown Journal, Ohio
Jul. 10--WEST CHESTER TWP. -- The national economic downturn may finally be having an affect on steelmakers as companies like AK Steel see a significant drop in stock prices this month.
Shares of AK Steel have dropped more than 18 percent since June 30, and analysts say oil prices may finally be affecting the steel industry along with the rest of the economy.
As steel prices have soared 82 percent this year, many steel customers are unable to swallow the inflated prices, with ArcelorMittal customers refusing to pay the company's last $250 surcharge.
Analysts say the drop is the result of investors dumping steel and coal mining stocks as record high oil prices -- topping $144 a barrel -- increase fears of a U.S. recession.
AK is not the only steel company feeling the pinch. U.S. Steel Corp. stock has dropped 13 percent and Nucor Corp. has fallen 14 percent.
It will take good earnings reports for the second quarter to boost company steel stocks back to the record-breaking levels seen in May and June, said Charles Bradford, a steel analyst with Bradford Research/Soleil.
"I think the earnings in the sector are going to be really good (in the second quarter) and there is nothing that has been said that is going to affect that at all," he said. "The question is how much do they surprise us on the upside." AK Steel officials were not surprised by the dip in stock prices, but said they will continue efforts that have propelled stock from $2 per share in 2003 to its level today.
"We cannot control the stock market. The market generally has been under pressure in the last several weeks, and our stock, along with other steel and basic material stocks, have traded sharply lower," said company spokesman Alan McCoy.
Even at the July 9 closing price of $54, shareholders in the long-term view have been rewarded generously he said, with the stock trading at $38 per share just last year.
Overall, AK Steel's stock is still up 40 percent over the past 52 weeks.
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