Metal Stocks Battered as Market Falls, Earnings Reports Scare

Metal companies' stocks were among the market's biggest decliners as some poor earnings and a drop in the perception of an economic recovery cut down hopes of increasing demand.

Metal stocks have been largely tied to the broader economic picture lately, particularly the picture in China and that economy's attempt to keep building, as many of the companies are waiting for expansion. When the general consensus is good, the stocks have been leading the rallies, only to lead the market right back down when investors get concerned again.

Among the decliners Thursday was Steel Dynamics Inc., which saw lower shipments hurt revenue in its fourth quarter, and as its earnings missed expectations. Steel Dynamics fell 5.6% to $15.02 in recent trading as the company said some demand had strengthened but building demand remains weak.

Goldman Sachs analysts said the shortfall was largely the fault of its metal recycling unit, not the "impressive results" of the steel division, and recommended buying up Steel Dynamics shares on weakness from the soft results.

Meanwhile, steel companies in the S&P 500 were all down, with AK Steel Holding Corp. down 6.2% to $19.98, Nucor Corp. down 3.5% to $40.49 and U.S. Steel Corp. falling 4.4% to $44.76.

As a whole, the materials sector was the worst performer in the S&P 500 recently, falling 2.46% compared with the index's 1.91% drop.

Concerns from China, which have recently sent material stocks falling, continued to build, as a steel executive there talked of rising iron-ore prices and noted that the country's current capacity is "reasonable." A poor U.S. jobs report also splashed cold water on the economic hopes that had fueled a few days of stock gains earlier this week.

Meanwhile, RTI International Metals Inc. slumped 12% to $22.98 in recent trading after swinging to a surprise loss in its fourth quarter.

The company said the results were affected by the "unprecedented" build-up in titanium supply for the commercial aviation supply chain. That supply has yet to be used, however, which RTI said is largely the fault of the two-year production delays in Boeing Co.'s massive, and titanium heavy, 787 Dreamliner. Airbus also cut production.

Chief Executive Dawne Hickton said the complexity of the supply chain means that further delays in emptying the titanium glut could happen and hurt the company's results.

"Despite some continued challenges for 2010, we are getting closer to the inflection point when our production increases dramatically," Mr. Hickton said. "Unfortunately, this point will not occur in the year ahead."

That helped send specialty metal firms falling as well including, Titanium Metals Corp., which tumbled 7.8% to $11.16, and Allegheny Technologies Inc., which lost 5.9% to $40.58.

Aluminum giant Alcoa Inc. was down 3% to $13.08 and was one of the worst performers in the Dow Jones Industrial Average. Century Aluminum Co. lost 6.2% to $11.44.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.