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Analyzing The Steel Industry’s Performance In 2014

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Global equity markets

Another year ended. 2014 has finally drawn to a close. It has been a turbulent year for global equity markets. The year started on a good note. Growth was finally getting back on track. It looked like the US was set to grow at a decent pace. Europe was also resolving its sovereign debt woes. However, China was slowing down. At large, the world markets seemed to accept this new normal for the Chinese economy.

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Steel industry’s 2014 performance

The steel industry experienced a roller-coaster ride in 2014. The sector’s fortunes changed several times. However, most steel plays delivered negative returns for investors. The above chart shows major US steel plays’ performance on Wall Street.

As you can see, only Steel Dynamics (STLD) managed to deliver positive stock market returns in 2014. It closed 2014 with ~2% yearly gains. Currently, it’s a top holding of the SPDR S&P Metals and Mining ETF (XME).

ArcelorMittal (MT) was one of the worst performers on Wall Street. It lost ~40% of its market capitalization in 2014. AK Steel (AKS) wasn’t far behind. It lost more than a quarter of its market capitalization last year.

U.S. Steel Corp. (X) lost ~12% in 2014. Even with its impeccable dividend yield, Nucor (NUE) couldn’t deliver positive returns to shareholders in 2014.

Series overview

In this series, we’ll discuss what went wrong with the US steel industry in 2014. We’ll also analyze the industry’s key opportunities and threats in 2015. Continue reading the next part of this series to learn more.

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