Durable Goods news good for Metalico (MEA)

Steel stocks are up big Wednesday on better-than-expected durable goods data.  This is great news for Metalico, Inc. (AMEX:MEA) which is enjoying watching their share price rise 10%.

May capped the second straight month of increasing durable goods orders. Demand was up by 1.8%, well above the expected -0.6% decline. Steel and Iron stocks are up big in response to the news, shrugging off new data released today showing an unexpected drop in new home sales in May. The market is also ignoring a potential shift in demand activity in China. Francisco Blanch at Merrill Lynch told Bloomberg that China might dig into its existing stockpiles rather than continue to buy up metals on the open market. The reduced demand could weigh on metal prices, which have advanced by as much as 48% this year.

As a whole, the Steel and Iron Stocks Index is up by 4.4%. It is now beating the S&P 500 by 6.6% over the last month.

Metalico has doubled in the last month. With the United States pouring money into infrastructure, basic materials are going to lead the way in recovery first.  In which case, a scrap steel specialist like Metalico is sitting pretty.