Shares of steel companies gained Monday after a Goldman Sachs analyst said the industry is beginning to rebound as demand for steel increases.
Analyst Sal Tharani raised his investment rating on the steel sector to "Neutral" from "Cautious" and said, in a note to clients, that demand is increasing as the construction industry recovers and growth continues in the auto, energy and other industries.
Steel companies have been hurt by the slow economic recovery, excess global steelmaking capacity and low prices. U.S. Steel, for example, has posted an annual loss for four straight years, and analysts polled by FactSet expect another unprofitable year in 2013.
Tharani raised his investment ratings on United States Steel Corp. and AK Steel Holding Corp. to "Buy" from "Sell," and on Steel Dynamics Inc. to "Buy" from "Neutral."
Shares of U.S. Steel rose $1.12, or 4.4 percent, to $26.90 in afternoon trading after hitting a 52-week high of $27.33 earlier. AK Steel shares rose 49 cents, or 11 percent, to $5.09 and Steel Dynamics shares rose 43 cents, or 2.4 percent, to $18.88.
But Tharani downgraded Reliance Steel & Aluminum Co. to "Neutral" from "Buy," saying that the metals processing company's long-term growth prospects are already reflected in the stock price. The stock has gained about 20 percent in 2013. Its shares fell 11 cents to $74.29 Monday.
Shares of other steel companies also rose Monday afternoon:
—Mechel OAO rose 13 cents, or 4 percent, to $3.24.
—Nucor Corp. rose 62 cents, or 1.2 percent, to $53.37.
—Ternium S.A. rose 13 cents to $26.42.
—Worthington Industries Inc. rose 25 cents to $41.13.