I think you're gonna' have trouble getting 8 out of this. A very large part of their product line is high quality steel used in auto's and home appliances, neither of which are going to do well. I did some work last December for a company that does maintenance repair of AK Steel equipment. That company has went from 30 employees down to 2. Certainly they had other issues, but just an indicator of what's up. I do project management for heavy industry and I can tell you there aren't any bright spots near term. Just a heads up and good luck with your trade.
Sector Snap: Steel Weak demand continues to pull down prices in steel sector, analyst says * Wednesday March 11, 2009, 9:39 am EDT HARTFORD, Conn. (AP) -- Weak demand is threatening steel industry efforts to shield itself from low prices, an analyst said in a note to investors However, Goldman Sachs analyst Sal Tharani upgraded Olympic Steel Inc. and Nucor Corp., citing their strong balance sheets. Tharani predicted further deterioration in end markets for steel such as nonresidential construction, autos, appliances, industrial production and energy. Federal stimulus funding for infrastructure projects should help, but it will not offset "very weak private sector demand" and the impact will not be felt until the end of this year at the earliest, he said. Tharani reduced his 2009 price estimate for hot rolled coil to $455 per ton from $534 per ton. He expects prices to bottom out in July at $430 and recover to $450 by the end of the year. He raised his ratings for Nucor Corp. and Olympic Steel Inc. to "Buy" from "Neutral." Tharani also said he expects Nucor's earnings to outperform peers due to a low and variable cost structure and its diversified mix of products. He downgraded Reliance Steel to "Neutral" from "Buy" because of his preference for Olympic Steel. Olympic Steel shares leaped $1.17, or 8.5 percent, to $15.02 shortly after the market opened Wednesday, while Nucor added 41 cents to $36.98. Tharani said some firms such as Worthington Industries Inc. may not be able to continue paying a dividend due to weak markets. Tharani said that some companies such as AK Steel Holding Corp., Steel Dynamics Inc., Worthington Industries, United States Steel Corp. and Gibraltar Industries Inc. could breach covenants later this year, requiring them to renegotiate with banks and increasing financing costs.
It has not gone below last low. Stories like that are usually posted up very late after the news is priced in. If it does not go below prior low then wait for the big white candle. When you see the whites of the candles, then pull the trigger.