Steel stocks place their hopes on innovation

Such great steel producers as AK Steel, ArcelorMittal and U.S.Steel, also called as integrated steel stocks, have reported about the innovation in steel production process recently.

Usually the production process foresees the use of iron ore in coal-fired blast furnaces, but now they prefer to use scrap for making steel in electric arc furnaces with the help of so-called minimills.

From the point of view of the experts, such innovation is a tool for making demand more competitive, what is the only way to reach higher prices. This improvement is to become a support in fighting the severe supply constraints.

The investigation of trading values obviously shows stable tends what is reflected in the growth of prices. So, the Dow Jones iron and steel index was 2.5 per cent higher and steel dynamics by automated quotation system NASDAQ is also rose 4.3 per cent.

The other trading results are the following:

• by JPMorgan: the raise of AK Steel’s price target to $34 from $29, U.S.Steel’s to $75 from $55 and ArcelorMittal’s to $55 from $45;
• by Longbow research: the raise of AK Steel’s price target to $28 from $24;
• by New York Stock Exchange: AK Steel stock was up 7.0 per cent at $25.21, U.S.Steel was 4.3 per cent higher at $63.55 and ArcelorMittal (Europe-based) was down 12 per cent at $47.93.