Is There an End in Sight for Worsening Steel Industry Indicators?



Steel industry indicators

In our previous indicators overview series, we noted that the fundamentals of the steel industry were not in the best of health. The 4Q 2014 earnings of steel companies also failed to instill any confidence among analysts. The 1Q 2015 earnings season in the metals and mining industry has already started with Alcoa’s earnings on April 8. Steel Dynamics (STLD) will be the first major company in the steel industry to report its financial results on April 20.

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Q1 has been quite an eventful time for steel plays. Most steel companies have delivered negative returns in the stock market, as the previous chart shows. On March 26, top executives of US Steel (X), Nucor (NUE), and ArcelorMittal (MT) presented their case before a team of congresspeople from major steel producing states. In particular, they briefed the team on the surge of steel imports in the United States.

What will we cover in this series?

In this series, we’ll analyze key steel industry indicators that investors should track. These indicators should help investors understand the latest developments in the steel industry. The SPDR S&P Metals and Mining ETF (XME) has ~35% exposure to steel plays. This ETF could be an alternative way to play the steel industry for investors who wish to avoid the hassles of picking individual stocks. AK Steel (AKS) and Carpenter Technologies (CRS) form 3.1% and 3.3% of XME, respectively.

Steel prices

Steel prices are a key driver of steel companies’ performance. Steel prices directly impact the revenue and profitability of steel producers. In the next part, we’ll discuss the latest trend in steel prices.


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