US steel fundamentals provide a green shoot for the bull camp. Recent steel inventories have dropped to their lowest levels since 1987 as per Goldman Sachs.
Steel inventories are also looking anemic in terms of months supply on hand, at just 2.3 months versus the five year average of 2.7 months. The flat rolled steel segment, the kind used for autos, is the thinnest due to Cash for Clunkers.
(Via Goldman Sachs “United States:Steel”, August 17th)
Yet US steel stocks gapped-down hard Monday, with companies like US Steel (X), Nucor (NUE), and AK Steel (AKS) getting slammed. For example, check out US Steel below.
As cyclicals, steel stocks are more sensitive to the economy than most. Yet in this situation, it appears they have some favourable conditions.
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