From Pittsburgh Post-Gazette
Shares of U.S. Steel and other steel producers rallied yesterday after Japanese car maker Nissan disclosed steel shortages are causing a five-day production halt at three plants.
The news encouraged views that steelmakers will continue benefiting from sharply higher prices caused by tight supply and surging demand in China.
U.S. Steel shares rose 7 percent, breaching the $50 mark for the first time in more than 20 years. They finished at $51.25, up $3.30 and have advanced 46 percent this year.
Rival AK Steel, another major automotive industry supplier, climbed $1.66, closing at $13.13. Nonunion producer Nucor rose $2.90 to $54.05 while International Steel Group ended at $40.72, up $1.62.
Nissan said unexpectedly strong demand for its newest models contributed to the production halt, which will affect three plants in Japan. South Korean steelmaker Posco said Nissan has asked it to boost shipments to alleviate the shortage.
Separately, U.S. Steel disclosed interest in bankrupt Canadian producer Stelco, joining a list of potential bidders that includes Russia’s Severstal.
Hamilton, Ontario-based Stelco can produce 5.9 million tons annually and had revenue of $2.3 billion last year. Canada’s largest steel producer sought bankruptcy protection in January, saying the rebound in steel prices came too late for the cash-strapped company.
In court papers filed Thursday in Canada, U.S. Steel said it “anticipates there may be substantial synergies” in acquiring Stelco.
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