Steel Dynamics shares sink after forecast-WEB ONLY

Shares of steel manufacturers fell sharply yesterday as the World Bank cut its 2009 global growth forecast, saying the world economy will shrink by 2.9 percent.
Fort Wayne-based Steel Dynamics Inc., Indiana’s fifth largest company, was among those who felt the impact. Its shares fell $1.65, or 10.7 percent, to $13.79 yesterday.

Pittsburgh-based United States Steel Corp. dropped $3.45, or 9.2 percent, to $34.12, and West Chester, Ohio-based AK Steel Holding Corp. slid $2.47, or 13 percent, to $16.50.
The World Bank’s latest forecast is a sharp reduction from its March prediction of a 1.7-percent global contraction, which it said then would be the worst on record.
Economic damage to developing countries “has been much deeper and broader than previous crises,” warned the report, issued Sunday in Washington, D.C.
The global economy should start to grow again in late 2009, but “the expected recovery is projected to be much less vigorous than normal,” the World Bank said.

Last Friday, Steel Dynamics projected a larger second quarter loss than Wall Street initially estimated, but said business conditions appear to be improving. The company said it expected a loss of 10 cents to 15 cents per share, while analysts polled by Thomson Reuters expect a loss of 9 cents per share.
Analyst Dana Guido of Merriman Curhan Ford and Co. yesterday raised her second-quarter estimate for Steel Dynamics to a loss of 10 cents per share from a loss of 46 cents per share.
She reiterated a “Neutral” rating on Steel Dynamics. “We believe the current valuation largely reflects our assumption of higher operating rates in 2010,” she said in a note to investors.
Guido said she is looking for improved earnings from steel manufacturers in the next several quarters, but said investors should shift from the more defensive mini-mills to the higher fixed-cost integrated mills as domestic-capacity utilization rates rise.