Despite increases in the U.S. steel industry's operating rate from 60% to 73%, the U.S. steel industry will only inch forward at best according to industry leaders. End markets, according to these leaders, are still in poor form as the housing market continues to struggle with a 10% decrease in housing starts for the month of May along with a 32.7% decline in May home sales. Consumers of steel are tentatively watching the economy to see how conditions fair; as such, steel consumption will level off in the meantime.
Weakening production by the Big Three domestic auto makers (Ford, GM and Daimler Chrysler) is a concern for all U.S. steel suppliers. US Steel recently announced on November 13, 2008 that it would be laying off 3% of its employees in the US and Canada (675 people total). The company specifically cited a lack of demand for flat-rolled steel, which is used in auto production among other things.
The RSI (a measure of relative strength among other stocks) has hit a ceiling these past few days and hasn't trended above it, and the PVT seems to be guiding lower which suggests to me that institutional investors are selling shares of X, not buying more. I don't see any reason why absent a high volume breakout above $195, that this stock would be a good purchase.
