NEW YORK (AP) — Shares of Commercial Metals Co. rose Monday after a security analyst initiated coverage of the carbon steel maker with a “Buy” rating on the shares and suggested it would make an attractive takeover prospect.
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UBS Investment Research analyst Timna Tanners praised the Irving, Texas-based company’s vertically integrated structure, which she said would fit well with Charlotte, N.C.-based Nucor Corp. and Brazil’s Gerdau SA.

“We consider CMC the most likely acquisition candidate of North American publicly traded steel mills,” she wrote.

Tanner also cited Commercial Metals’ diversified portfolio, which stabilizes earnings in a variety of markets.

“We have strong conviction in the longer-term value of CMC shares, driven by robust international growth and the potential for it to be acquired.”

In the near term, though, the analyst warned of “margin pressure or containment on rising scrap costs, trouble passing costs downstream and big LIFO charges.”

LIFO refers to the last-in-first-out method that assumes the most recent inventory purchases or goods manufactured are sold first. In periods of rising prices that results in an expense that eliminates inflationary profits from net income.

The likelihood of big LIFO charges — in the near future — contributed to Goldman Sachs analyst Sal Tharani on Friday cutting his earnings estimates and price target on the shares.

He raised his estimate on the steel producer’s third-quarter LIFO charge to $60 million from $20 million. Tharani, who has a “Neutral” rating on the shares, also cut his price target by a dollar to $36 and reduced his 2008 earnings-per-share estimate to $2.51 from $2.72.

Analysts polled by Thomson Financial expect 2008 earnings per share of $2.50.

Shares gained $1.19, or 3.8 percent, to $32.90.

WASHINGTON, D.C. – The American Iron and Steel Institute (AISI) reported today that for the month of March 2008, U.S. steel mills shipped 9,158,000 net tons, a 1.9 percent decrease from the 9,331,000 net tons shipped in March 2007 and a 0.2 percent decrease from the 9,174,000 net tons shipped in the previous month, February 2008. 

A year-to-year comparison of year-to-date shipments shows the following changes within major market classifications: service centers and distributors, up 4.1 percent; automotive, down 1.2 percent; construction and contractors’ products, down 1.2 percent; and oil and gas, up 8.8 percent.

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice.  AISI also plays a lead role in the development and application of new steels and steelmaking technology.  AISI is comprised of 31 member companies, including integrated and electric furnace steelmakers, and 130 associate and affiliate members who are suppliers to or customers of the steel industry.  AISI’s member companies represent approximately 75 percent of both U.S. and North American steel capacity

NEW ORLEANS — Steelmaker Nucor Corp. has chosen a tract in southeastern Louisiana as the only possible U.S. site for a $2 billion iron-making plant that would create 500 jobs, the company said Thursday.

Charlotte, N.C.-based Nucor said it had applied for a permit to build on a 380-acre site in St. James Parish once considered for a plant by German steelmaker ThyssenKrupp AG.

Nucor said the site near Convent on the Mississippi River is the only one under consideration in this country. However, the company said foreign sites are still in the running and that a final decision will be made later by the company’s board. Neither those sites nor a time frame for a decision was given.

Last year, ThyssenKrupp considered the site for a $3.7 billion steel mill expected to create 2,700 jobs before settling on a location near Mobile, Ala.

According to Nucor, the plant’s initial phase, costing $2 billion and employing up to 2,000 construction workers, would include a port on the Mississippi River capable of handling ocean vessels and large barges, plus a three-million ton blast furnace. That plant would employ 500 people with an average salary of $75,000.

Nucor said it was also considering another phase, to add a second blast furnace, at a cost of $1 billion. That would boost payroll to 750.

“This facility would create hundreds of good jobs for American workers and demonstrate the effectiveness of new technology to protect the environment,” Nucor chief executive officer Daniel DiMicco said in a statement.

The plant would produce pig iron, normally imported from overseas, a raw ingredient in steel making.

Nucor said the plant would generate its own power by using technology that recovers heat from coke fuel. In rejecting the site last year, ThyssenKrupp said the Alabama site offered much-cheaper power rates.

The plant also would have technology to produce a byproduct used by the cement industry, Nucor said.

Nucor said an incentive package offered by the state, including infrastructure improvements, was key to its considering the Convent site. Details of the package were not released.

“We’re finalizing those details now,” said Economic Development Secretary Stephen Moret.

Moret said the company was considering a third phase to the project, but Nucor was not yet ready to release details.

Louisiana offered ThyssenKrupp an incentive package valued at $1.97 billion.

U.S. Sen. Mary Landrieu and U.S. Rep. Charlie Melancon said Nucor worked both with former Gov. Kathleen Blanco, who had pushed the ThyssenKrupp project, and Gov. Bobby Jindal, who took office in January, succeeding Blanco.

The two Democratic lawmakers said Nucor intended to pay the St. James Parish school system $850,000 annually for work force education projects.

The project would mean about $3.3 million annually in additional sales taxes for the parish, Nucor said.

In a statement issued by the company, Jindal said the project would be “a tremendous boost to Louisiana’s economic development and further job creation.”

In a separate statement, Blanco said she visited with Nucor officials last September and told them she “was confident the next administration would continue our commitment to landing a major steel manufacturer.”

“I am so pleased that the Jindal administration followed through with this goal, and that our efforts are moving forward,” the former governor said.

Nucor, which has operations primarily in the United States and Canada, employs about 20,000 people.

For the first quarter of 2008, the company said its net income rose to $409.8 million, or $1.41 per share, compared with $381 million, or $1.26 per share, during the same period in 2007. Revenue grew to $4.97 billion from $3.77 billion last year.

China Iron & Steel Association issued a statement on behalf of 21 Chinese steel mills who have signed long term iron ore purchase contracts with Rio Tinto in fiscal 2007.

CISA in a statement said that “In fiscal 2006, 22 Chinese steel mills signed long term iron ore purchase contracts with Rio Tinto. The contracted supply volume amounts to 54.81million tonnes, but the actual supply tonnage is 48.46 million tonnes, with the executed contract ratio of 88.42%. Of this, two companies have reported executed contract ratio of below 80% and the lowest ratio even goes down to 72%.”

CISA added that “In fiscal 2007, 21 Chinese steel mills inked long term iron ore purchase contracts with Rio Tinto. The contracted supply volume amounts to 60.73 million tonnes, but the actual supply tonnage is 52.37 million tonnes, with the executed contract ratio of 86.24%. Of this, seven companies have reported executed contract ratio of below 80% and the lowest ratio is 53.17%.”

It added that “On one hand, it has sent written notice to Chinese contracted buyers that it may not be able to guarantee the contracted supply tonnage in full amount due to force majeure. On the other hand, it has sent large amount of iron ore to Chinese spot market. Therefore, market participants doubt that Rio Tinto has reduced the long-term contract supply volume on purpose, and shifted the supply to spot sales for gaining greasy profit.”

Rio Tinto has announced to sell 15 million tonnes of iron ore to the spot market and launched active marketing in China despite low executed contract ratio for Chinese contracted buyers in the last quarter of last year.

CISA also condemns that Rio Tinto are supposed to abide by the supply contracts for the sake of responsibility and integrity. Chinese steel mills have established long-term cooperative ties with Rio Tinto over the years, and hope this relationship would prosper in the years ahead.

The association also urges Chinese mills and trading houses to boycott or not to get involved in the spot iron ore sales from Rio Tinto in China. And Chinese steel mills have suffered huge loss because Rio Tinto failed to fulfill the contracted supply volume in last two years. Therefore, CISA would keep a close eye on this issue and take necessary measures to defend the legitimate interest of Chinese mills.