Wednesday, KeyBanc Capital downgraded Nucor Corp. (NUE) and Reliance Steel & Aluminum Co. (RS) shares to Hold from Buy. However, the brokerage upgraded United States Steel Corp. (X) and Olympic Steel Inc. (ZEUS) shares to Buy from Hold. The brokerage maintained its price target on X stock at $47, and on ZEUS stock at $25.
In addition, the brokerage raised its price target on Steel Dynamics Inc. (STLD) shares to $18 from $15, while maintaining its Buy rating. The brokerage lowered its 2009 per share estimate to loss $0.10 from profit $0.05, and its 2010 EPS estimate to $1.10 from $1.50.
The brokerage increased its price target on AK Steel Holding Corp. (AKS) shares to $23 from $17, while maintaining its Buy rating. The brokerage widened its 2009 loss per share estimate to $1.00 from $0.50.
The brokerage lowered its 2009 EPS estimate for Gerdau AmeriSteel Corp. (GNA) to $0.03 from $0.12, while maintaining its 2010 estimate of $0.60.
The brokerage increased its price target on GrafTech International Ltd. (GTI) shares to $15 from $12, while maintaining its Buy rating. The brokerage maintained its 2009 EPS estimate of $0.30, and its 2010 estimate of $1.10.
Analyst Mark Parr noted that emerging industry momentum has triggered a shift in his investment thesis to better capture emergence of pricing and demand recovery in U.S. flat-rolled markets. Indicators increasingly point to pricing upside in flat-rolled products into the June-July time frame as service centers begin to gradually re-engage the market.
The analyst said that scrap remains relatively scarce with a stronger than expected June buy and maintenance of record export momentum. U.S. flat-rolled pricing appears well below Chinese, Northern and Southern European levels, suggesting upside in the absence of economic recovery as supply discipline is maintained.
The analyst added that a weakening U.S. dollar also furthers U.S. producers' global competitive advantage, including more positive import-export dynamics, raw material advantages, and very competitive logistics.
While the analyst recognizes U.S. Steel has more fixed cost operating leverage, he believes the stock will react favorably to global recovery in flat-rolled products and potential stabilization in energy end markets. The analyst upgraded Olympic Steel given its earnings leverage to flat-rolled pricing upside and significant cost reduction momentum.
The analyst's Buy ratings on Steel Dynamics and AK Steel are maintained given above-average flat-rolled exposure and the increased likelihood of sequential earnings improvement for second quarter of 2009 and beyond.
The analyst downgraded Nucor and Reliance Steel & Aluminum to Hold from Buy. This reflects a combination of lower flat-rolled exposure, above-average exposure to non-residential construction markets, and the generally superior share price performance achieved over the fourth quarter of 2008/second quarter of 2009 time frame.
While the analyst views NUE and RS as market leaders with increasingly solid capital structures and positive long-term risk-reward ratios, he senses greater near-term upside in companies with more exposure to consumer-sensitive flat-rolled end markets.
Given GTI's highly variable operating model, aggressive cost-cutting initiatives, the importance of GTI's niche to the global steel industry, the strength of its balance sheet, and solid pricing power, the analyst feels that its shares offer a compelling way for investors to gain early-cycle exposure to any nascent recovery.
Although lack of near-term graphite electrode pricing upside remains a risk to the analyst's 2009 and 2010 outlooks, evidence of industry-wide supply discipline and early signals of recovery from Asia are incrementally supportive his positive investment thesis.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.