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Steel Industry Midyear Update: Key Investor Takeaways

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Steel Industry Midyear Update: Key Investor Takeaways PART 1 OF 14

How the US Steel Industry Looks under the Current Scenario

US steel industry

If you are an investor in any of the major steel companies, it’s likely that your investment has not given the desired returns over the last eight-odd months. The steel industry’s fundamentals have been weak, led largely by massive global overcapacity and the deep capex (capital expenditure) cuts announced by energy companies. The energy sector accounts for almost 10% of the total US (SPY) steel consumption.

How the US Steel Industry Looks under the Current Scenario

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Series overview

In our previous series, we noted that steel industry indicators could be bottoming out. You might want to look at the result of the improving indicators on steel company share prices. Looking at the surge in steel imports in the previous months can take a bit of time.

In this series, we’ll analyze how the steel industry is currently placed. We are midway through the year, and it is a good time to analyze your investment portfolio. It’s been a tough year so far for steel companies, and that is reflected in their share prices as well.

Steel companies have lagged the broader markets

The above chart shows the recent performance of major steel companies. Several steel companies, including US Steel Corp. (X), Gerdau (GGB), AK Steel (AKS), and ArcelorMittal (MT), are trading near their 52-week lows. The Greek situation has taken a toll on the metals sector, and the share prices have corrected steeply over the last few trading sessions.

In this series, we’ll analyze the way forward for the US steel industry. Plus, we’ll explore the various risks that the industry is currently facing. First, let’s look at some of the positive developments in the steel sector in the next part.

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