Co-Steel (CEI-TSE)
$4.14, up 24 cents
Stelco (STE.A-TSE)
$5.18, up 13 cents
Steel makers Stelco Inc. and Co-Steel Inc. could benefit from the federal government's "pro-active" response to preventing diversion of steel imports into Canada, an analyst said. Earlier this month, the United States imposed tariffs of up to 30 per cent on a number of steel products. Though Mexico and Canada are exempt, there is widespread concern about the possible diversion of foreign steel into the Canadian market, which prompted the federal government on Friday to launch a safeguard investigation into whether certain steel imports are harming Canadian steel makers. Though the safeguard investigation is expected to be completed in August, the government said it will invoke the "critical circumstances" provision if an import surge is detected before the investigation is over. "We still have to go through due process," Randy Cousins, an analyst at BMO Nesbitt Burns Inc., told Dow Jones. But if any importers try to get a jump on a possible tariff, they won't get away with it, he said. He noted that Stelco, because it has no U.S. assets and would be more vulnerable to diversion, is the "obvious winner" from the government's action. More than 2.6 million shares of Stelco changed hands on the TSE yesterday. Investors also appear less concerned about Co-Steel, which has a key mill in Ontario that would be at risk to diverted imports. "The market seems to have decided the government actions took us a long way forward to creating a Fortress North America against unfairly traded imports," Mr. Cousins said. While import restraints and plant shutdowns have caused steel prices to spike recently, the recovery may be short-lived, said Anna Sorbo, an analyst at CIBC World Markets. "At the end of the day, we also need a solid recovery in demand to see a sustained recovery in steel prices," she said. "There is no significant recovery in demand yet." In other steel stocks, Ipsco Inc. (IPS-TSE) rose 26 cents to $26.06, but Dofasco Inc. (DFS-TSE) fell 35 cents to $27.44. Specialty steel product producer Slater Steel Inc. (SSI-TSE) fell 5 cents to $15.95. Slater said it has closed an offering of 3.5 million common shares at $16.50 each for net proceeds of about $55-million.
Copyright 2001 The Globe and Mail |
