Global steel indicators
In our recent series, we analyzed the key indicators of the US economy. However, steel is a global commodity, and steel companies in the United States are affected by developments in the global steel industry. China, India, Japan, and Europe are among the top steel-consuming regions in the world.
What do we cover?
In this series, we will analyze how global steel indicators are shaping up, as well as steel demand and supply dynamics. The World Steel Association releases monthly steel production figures for major steel-producing regions.
Steel consumption can also be gauged from the trends in end user demand. The construction and automobile industries are among the major end consumers of steel products.
China’s slowdown in demand has negatively impacted the global steel industry. China is the world’s largest producer—and consumer—of steel. Indicators of the Chinese steel industry should be closely tracked by investors. The slowdown in China’s steel consumption impacts steel companies like ArcelorMittal (MT), US Steel (X), AK Steel (AKS), and Gerdau S.A. (GGB). As shown in the above chart, share prices of these companies have taken a beating this year.
The SPDR S&P Metals and Mining ETF (XME) has underperformed the broader markets so far in 2015. XME is down by more than 5% this year, while the SPDR S&P 500 ETF (SPY) has delivered positive returns of 2.5%.
Steel production in the United States has declined this year. Through March 7, 2015, steel production is down 3.4% over the same period in 2014. However, investors should keep a close eye on global steel production figures as well. We will discuss this in detail in our next article.