Industry Experts Expect Steel Prices to Increase Due to Growth in Automobile Sector

Steel demand and production have improved nicely in the past year due to increased government support and more balanced demand.

The rebound in demand has been largely attributed to stronger auto and non-residential construction sectors as well as surging steel demand from China and India. According to the Steel Index, Iron-ore prices more than doubled in the past two years largely due to emerging market demand. The Bedford Report examines the outlook for companies in the Steel Industry and provides research reports on United States Steel Corporation (NYSE: X) and Nucor Corporation (NYSE: NUE).

Steel industry experts expect steel prices to increase by $25-30 per tonne in the next three to four months, aided by growth in the auto sector. It is estimated that car production could increase by as much as 50 percent in the coming years as demand for automobiles picks up. This is welcome news for the steel industry as the automotive sector historically used around 20% of the United States production supply.

Yesterday US Steel posted a fourth quarter net loss of $249 million, or $1.74 a share. While this is the company's eighth consecutive quarterly loss, the numbers compare favourably to a loss of $267 million, or $1.86, a year earlier. The company says it will not immediately benefit from the surging price of steel and forecast a "modest improvement" in first-quarter results.

Nucor is scheduled to report earnings tomorrow. Last month the company forecast a loss of 10 cents to 15 cents a share in the fourth quarter.

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