Reuters reported that US steelmakers, who are pressing President elect Mr Barack Obama for an aggressive stimulus plan to revive the sagging market, could soon see an increase in demand as buyers move to restock shrinking inventories.
As per report, shares of such steel companies as Nucor Corporation and US Steel Co fell sharply in recent months after steel buyers withdrew orders because of frozen credit markets and the slumping US, European and Chinese economies.
Mr Bob Richard analyst with Longbow Research said that "I think a more timely catalyst for steel company stocks is not necessarily the stimulus package, but these service centers have pared down their inventories to an unprecedented level."
Mr Richard said that he had buy ratings on both US Steel and Nucor and believed companies such as Brazil's Gerdau North American operations would benefit from any upturn in demand from a government stimulus package.
Mr Daniel DiMicco chairman & CDEO of Nucor said that the industry is asking the incoming administration to deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a buy America clause.
It may be noted that since September 2008, US steel output has plunged about 50% to its lowest point since the 1980s, largely because construction and auto production have fallen sharply. The fall off in production of appliances, machinery and other electrical equipment has also reduced steel orders, sending the price of a ton of steel down by half since late summer.