* Shares up as much as 6.03 percent at C$26.49
* Company sees good steel price, strong tube demand in ‘11
TORONTO, Feb 18 (Reuters) - Shares of Russel Metals (RUS.TO) rose more than 6 percent on Friday morning after the metals processing and distribution company reported a better-than-expected fourth-quarter profit the day before [ID:nN16180454].
Shares were up as much as 6.03 percent at C$26.49 on the Toronto Stock Exchange before curbing gains to C$26.20.
In a conference call with investors, Russel Metals Chief Executive Brian Hedges said he expects a strong first half in 2011, but warned that high steel prices would not last forever.
“The question is whether the supply side is going to increase the capacity so much that there’s a lot of steel around,” Hedges said. “That’s the wild card.”
Steel prices have risen recently on demand from growing urbanization in China, India and other big developing countries, prompting a rush to mine more iron ore to make more steel.
Revenue at the Toronto-based company’s tubular steel division, which makes tubing and pipes for the energy sector, increased by 31 percent from the year-before quarter.
Russel said high oil prices and strong drilling will continue to drive demand for tubular steel products in 2011.
The company increased its quarterly dividend by 10 percent to 27.5 Canadian cents a share and analysts expect more dividend increases in 2011.
$1=$0.98 Canadian Reporting by Julie Gordon; editing by Peter Galloway