Please ensure Javascript is enabled for purposes of website accessibility

Why United States Steel Stock Just Popped 8%

By Rich Smith – Oct 7, 2020 at 2:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Steel demand revives, bringing U.S. Steel stock along for the ride.

What happened

Shares of U.S. Steel (X 1.96%) look red-hot this afternoon, up 7.9% in 1:45 p.m. EDT trading on the back of positive news about the health of the U.S. steel industry.

So what

What news, specifically? According to the latest weekly update out of the American Iron and Steel Institute, raw steel production in the U.S. climbed 0.3% sequentially over the past week, rising to 1.484 million net tons of steel produced, while steel-capacity utilization climbed 50 basis points to 66.6%.  

Mind you, this data relates to all steel produced and all steel-production capacity utilized by all U.S. steelmakers in general -- not just U.S. Steel in particular. Still, if what's good for the steel industry is also good for U.S. Steel, then this latest data sounds pretty good.

Molten steel being poured in a foundry.

Image source: Getty Images.

Now what

There is, however, an important caveat to bear in mind. Specifically, the fact that when compared to where we were a year ago, the U.S. steel industry is still in quite a bit of a slump. Year over year, steel production remains down 17.7%, and capacity utilization is 1,110 basis points lower (i.e., utilization was 77.7% a year ago).

With U.S. Steel reporting losses of $1.7 billion over the past year, it's going to take a whole lot more than fraction-of-a-percent increases to emerge fully from its slump. For the giant steelmaker, this recession remains a long way from over.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

United States Steel Stock Quote
United States Steel
$27.04 (1.96%) $0.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.