Shares of United States Steel Corp. and other steel companies rose Monday after some manufacturers announced price hikes last week, fueling expectations of improving demand.
U.S. Steel's share price increased 7 percent by early afternoon. Nucor Corp. shares rose 2 percent, Steel Dynamics, 3.6 percent, and AK Steel Holding Corp., 5 percent.
The steel industry should see demand growing stronger and prices rising as inventories have dwindled, UBS analyst Shneur Gershuni said in a research note Monday.
"We may see buyers blinking and prices moving up from here," wrote Gershuni. "Imports, quite attractive six weeks ago, should decrease and buyers may be forced to restock into rising prices."
Gershuni expects U.S. Steel's earnings to grow faster this year with improving demand, lower costs and higher prices. He reiterated his "buy" rating on the Pittsburgh manufacturer's shares and raised his 12-month price target to $47 from $38 per share.
UBS also raised its ratings for stock of Nucor and Steel Dynamics Inc.
Nucor went to "buy" from "neutral," with a price target of $47.50, up from $46 per share. Steel Dynamics also went to "buy" from "neutral," and UBS set its price target at $18 per share, up from $16 per share.
By early afternoon, shares of U.S. Steel were up $2.17, or 7.3 percent, trading at $31.92. Nucor Corp. shares rose 76 cents to $44.99. Steel Dynamics increased 72 cents, or 4.8 percent, to $15.75. And AK Steel Holding shares rose 41 cents, or 5 percent, to $8.61.