Shares of United States Steel Corp. (NYSE:X) rose 4.21 percent on Tuesday after a Deutsche Bank upgrade as basic materials and healthcare led the stock market higher.
Analyst David Martin upgraded U.S. Steel from “hold” to “buy” today. He also has buy ratings on Nucor Corporation (NYSE:NUE), another American steel manufacturer, and ArcdelorMittal (NYSE:MT), a European steel maker.
DB increased its forecast for steel prices by 3% on its “’bullish’ view for bulk materials. Martin believes that the recent gains in steel price “are broadly supported by economic growth.”
Deutsche Bank forecasts 2010 GDP growth to be 4 percent globally and 3.5 percent for the US. Chinese Steel consumption in is projected to “increase 11% in 2010 as a result of the ongoing infrastructural project construction”.
Martin also issued a similar report for American steel company Gerdau Ameristeel Corp (NYSE:GNA), which he expects to “benefit from infrastructure spending as a result of U.S. government stimulus”.
In a speech yesterday, IMF Managing Director Dominique Strauss-Kahn said that the recent “growth was still largely driven by government stimulus measures” while “private demand” was still weak.
Basic material stocks have outpaced growth for non-cyclical consumer stocks since January 20, 2009, up 57 percent versus 14 percent respectively.
Other gainers today from the basic materials sector include the Stillwater Mining Company (NYSE:SWC), up 12.2 percent, Domtar Corp.(NYSE:UFS), up 5.7 percent, and Methanex Corp. (NYSE:MEOH), up 5.2 percent.