Sector Snap: Metal producers' shares rise

AP News
Posted: Jan 04, 2010 4:25 PM

Shares of metals producers rose Monday amid reports of stronger manufacturing activity while the commodities sector saw gains on raw materials' price increases.

The weakening dollar also benefited the sector because commodities, which are priced in dollars, become cheaper for foreign buyers when the dollar falls.

The cost of raw materials used in manufacturing steel, such as iron ore and coal, have increased in recent weeks. That trend is expected to continue in 2010, Longbow Research analyst Luke Folta said.

"I think there is a cost push on the materials side that is translated into higher steel pricing," Folta said in a telephone interview. "I think it's a positive outlook for metals prices in 2010."

Positive reports on manufacturing activity came Monday from China, Europe and the United States which gave investors hope that an economic recovery is growing stronger, said Joe Battipaglia, market strategist for the private client group at Stifel Nicolaus & Co. in Yardley, Pa.

China's manufacturing grew for a ninth straight month in December, bolstered by that government's stimulus spending, according to the HSBC China Manufacturing survey.

In addition, a monthly purchasing managers' index for the 16 countries that use the euro rose to a 21-month high in December.

The Institute for Supply Management, a trade group of purchasing executives, said it was the fifth straight month of expansion for its index on manufacturing activity. It also marked the highest reading for the index since April 2006.

Shares of United States Steel Corp. rose $2.79, or 5.1 percent, to close at $57.91. AK Steel Holding added $1.40, or 6.6 percent, to $22.75. Alcoa Inc. climbed 53 cents, or 3.3 percent, to $16.65. Allegheny Technologies Inc. rose $2.51, or 5.6 percent, to $47.28. Century Aluminum Co. added $1.03, or 6.4 percent, to $17.22.


AP writers Stephen Bernard and Tim Paradis contributed to this report.