When an oil rig shuts down in the face of depressed prices, steel mills are usually not too far behind.
That's part of the reason why three members of Real Money's "Stressed Out" watch list -- U.S. Steel (X), AK Steel (AKS), and TimkenSteel (TMST) -- have been getting hammered over past year.
And it also happens to be the reason shares are collectively booming on Wednesday. (U.S. Steel is leading the charge, with shares up more than 11% in afternoon trading, followed by more than 7% gains at both AK Steel and TimkenSteel.)
A rally in crude -- up more than 5% by midday to nearly $31 a barrel of West Texas Intermediate -- has shareholders excited about what could mean renewed steel orders from oil-and-gas customers and a relatively moderate increase in metal prices, which has also helped to buoy shares Wednesday.
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All three of the companies have been buried in debt lately, with high-yield bonds far exceeding meager earnings (or losses in many cases), which has put a major interest expense squeeze on much-needed cash flow. And oil prices have become one of the most crucial barometers for the potential of share-price turnarounds, as a dry-up in product orders from a formerly reliable client base of oil customers has caused shareholders to flee in droves.
Canton, Ohio-based TimkenSteel shares are down 75% over the past 12 months followed by 69% and 45% declines at Pittsburgh's U.S. Steel and West Chester, Ohio-based AK Steel, respectively.
For more on Real Money's 20 distressed companies to watch: