AP reported that shares of United States Steel Corporation surged after a Goldman Sachs analyst raised his rating of the stock, saying the company is in good position to capitalize on rising steel prices.

Mr Sal Tharani analyst at Goldman Sachs raised his rating of US Steel to Buy from Neutral and raised his price target to USD 75 from USD 61. He also raised his full year earnings forecasts for US Steel for this year, as well as 2012 and 2013. For 2011, he expects a profit of USD 3.50 per share, up from his earlier estimate of USD 2.50 per share. That forecast is below the consensus estimate of analysts surveyed by FactSet, who expect a full year profit of profit of USD 3.63 per share, on average.

Stocks of US Steel and other steel makers have recently leveled off due to concern that a decline in scrap metals prices will be followed by lower steel prices. US Steel's profits have been hurt because it has recently had excess production capacity.

Mr Tharani said in a research note that he believes market worries about the recent dip in scrap prices are overdone. Domestic steel prices will be supported by increased production costs for steel makers globally. With its own source of iron ore and access to other raw materials, US Steel is in better position than other steel companies.

Mr Tharani wrote that "With a high leverage to steel prices and demand, and one of the best cost positions on the raw materials, we see potentially significant upside to US Steel's share price."

With steel demand rising, Mr Tharani expects US Steel's excess of production capacity will ease this year. He forecasts the company's utilization rate will rise to 85% in 2011 from 76% 2010.

(Sourced from Associated Press)