Shares of United States Steel Corporation (NYSE:X) are showing heavy selling on Thursday as analyst Nomura downgraded the stock amid weak demand.
Slow global economic growth has lead to weak demand from manufacturers in the U.S. Steel industry, especially in China creating ample inventories of steel.
Increase raw material cost and slow demand from China is resulting into intense completion by the U.S. Steel industry. Shares fell more than 3 percent and there was a broad sell-off in the sector as well.
Nomura analyst Curt Woodworth lowered his rating on the stock to "Neutral" from "Buy" and share price target to $20 from $32. He even changed his earnings estimates. He said limited ability to lower raw material costs has resulted in higher prices for U.S steel products.
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U.S. Steel's "earnings power is most eroded in a world of lower raw materials prices given its captive iron ore and self-sufficient coke (coal) position," he wrote.
Woodworth lowered his third-quarter per share estimate to a loss of 5 cents from break-even, estimated profit of $1.50 per share for the full year in comparison to previous estimate of $2.05 per share. He lowered his 2013 estimate to 40 cents per share from $3.30.
Shares of United States Steel fell 83 cents or 4.03% to $20.02 at mid day on Thursday. The price range for past 52 weeks ranged from $17.67 to $32.52 per share.