Hold tight, steel, financial experts suggest the future is bright(ish)

Dec 20, 2009 | 07:00 PM |

Looks like some of the leading gurus of the steel and energy industries think 2010 will be recovery-time USA.

We know, we know, a lot of you don't care what those guys and gals ensconced in their big city glass towers say.

But, hey, if we do a quick round up of some of some recent financial analyst/consulting community opinion, that means you don't have to read all that dry prose yourself.

And, really, who wants to read turgid MBA-speak on a good day, never mind over the holidays?

On the steel front, first up is Morgan Stanley.

Steel industry wizard Mark Liinamaa predicts that U.S. Steel's tubular business "could stage a 2010 recovery well above current expectations."

Sure, Liinamaa concedes, many tube mills are only running at about 30 percent capacity at the moment. But the dreaded oil country tubular goods (OCTG) "inventory overhang" should "dissipate" by next spring, the analyst said in a research note published last week.

As he sees it, that dissipation will occur because of a ramped-up rig count and shale plays that gobble up more OCTG than traditional oil and gas wells. It doesn't hurt that imports are "negligible," he noted.

"The market's view that tubular will struggle through 2010 is too pessimistic," Liinamaa confidently asserts. (We wish we could genuinely feel so bullish.)

The market might still be feeling skittish in part because of "weak" natural gas fundamentals, Liinamaa reasons. But working in X's favor may be the content of the "overhang"—much of it "commodity-grade Chinese OCTG." That cheap, um, stuff just won't cut it when it comes to complicated shale drilling projects. And shales also happen to be where an increasing amount of oil and gas exploration action is, Liinamaa says.....





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