Steel Stocks Run on China News

• By the tickerspy.com Staff
• On 9:53 am EDT, Wednesday October 14, 2009

Reports of a Chinese production cut helped U.S.-listed steel stocks on Wednesday.

According to Bloomberg, Chinese overproduction has weighed on steel prices amid a government-supported boost in demand. Now facing "severe oversupply," according to the Wuhan Iron & Steel, the government has plans to curb production and shut down certain mills and limit iron imports. According to the Associated Press, U.S. steel exports exceeded imports in August for the first time in more than half a century.

The news is sending the Steel and Iron Stocks Index higher today. Before the bell, it was beating the S&P 500 by 1.4% over the last month.

London steel giant Rio Tinto (NYSE: RTP - News) is ahead by 4% in the rally. The company announced today that its third-quarter iron ore output rose 12% from the same period last year to a new record for the three months ended September 30, according to MarketWatch.

U.S. steel companies, Nucor (NYSE: NUE - News), Cliffs Natural Resources (NYSE: CLF - News), and U.S. Steel (NYSE: X - News) are also moving higher today.

Russian steel company Mechel (NYSE: MTL - News) is adding 4.5% to its sector-leading 35% one-month rally. The stock could move higher if Russia's largely commodity-driven economy benefits from stable oil prices.

Vale (NYSE: VALE - News), among other U.S. listed Brazilian equities, could benefit from increased development ahead of the 2016 Summer Olympic Games in Rio De Janero. The stock is another top performer over the last month, up by over 20%.

The Steel and Iron Stocks Index is ranked among the 50 cheapest tickerspy Indexes by P/E ratio with an average multiple of only 15.2x.

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