Steel stocks dove with the broader market Thursday, but fresh inventory data paint a rosy picture going forward.
Steel inventories at the end of October were at their lowest levels in nine years, according to data released on Thursday by the Chicago-based Metal Service Center Institute. Inventories decreased 27% from the same month last year to 12.3 million tons, the lowest level since March 1998, when inventories totaled 12.6 million tons.
Sam Halpert, a senior analyst at Van Eck Global, said that U.S. demand for steel is soft because of the sagging housing market and weakness in the automobile industry. But with inventory levels low and steel shipment levels rising only slightly, steel producers are likely to face higher demand and higher steel prices in early to mid 2008, Halpert said.
Charles Bradford, an analyst at Soleil Bradford Research, said that currently U.S. steel prices are much lower than prices in Europe and China, which makes exporting attractive for U.S. producers. Bradford said U.S. steel exports were up more than 20% in September.
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