Investors Steel Selves for Steel's 2011

(TheStreet) -- Steelmakers have lifted prices for certain products to levels not seen since the boom era, inducing a bullish spirit in some industry watchers, who say share prices among steel names have yet to catch up. A run-up in raw materials prices has helped steel mills press home higher prices with their biggest customers, especially auto makers and distribution centers. The going price for a ton of hot-rolled coil -- the core product of the traditional Big Steel blast furnace -- has spiked from about $500 in early December to more than $800 as of mid January. The last time it saw such heights came in April 2008. Certainly, steel stocks rallied in December. But bullish observers point out that the last time steel prices were at these levels, U.S. Steel X shares were trading north of $150, Nucor NUE traded at more than $70 and AK Steel AKS was above $65. The stocks now stand at $55, $45 and $15, respectively. The reasons behind the raw materials price inflation have been well documented. Epochal floods have inundated the coal mines of Queensland, Australia, which supplies nearly 70% of the planet's coking coal, used to smelt iron ore in blast furnaces, and therefore a crucial steel ingredient. China's steel industry -- the biggest on earth -- continues to absorb so much coal and iron ore that the likes of Rio Tinto RIO and Vale VALE posted record production during the fourth quarter. Meanwhile, the price of scrap metal has roared higher, allowing the electric-arc furnace companies such as Nucor and Steel Dynamics to increase prices as well. Continue reading the article.