Analyzing the US Steel Industry: What Can Investors Expect?



Steel industry

In our previous series focused on the health of the US steel industry, we discussed why steel industry indicators could be bottoming out. US steel demand had double-digit growth last year. However, the World Steel Association expects US steel consumption to be lower this year—compared to 2014.

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What do we cover?

In this series, we’ll analyze the state of the US steel industry as it enters May. We’ll discuss the latest trends in steel prices, as well as steelmaking raw materials. Iron ore and steel scrap are the primary raw materials for making steel. We’ll also look at the latest trends in steel production and demand. Since steel is a global commodity, several global factors impact the US steel industry. We’ll also look at some of the global indicators.

Steel industry’s first quarter earnings

Now, we’re approaching the end of this earnings season. Most steel companies, with the exception of ArcelorMittal (MT), have released their earnings. The first quarter earnings have been a mixed bag for the steel industry. While companies like Nucor posted better-than-expected earnings, U.S. Steel (X) disappointed with its first quarter earnings. Currently, Nucor forms 3.7% of the SPDR S&P Metals and Mining ETF (XME). Carpenter Technology (CRS) forms 3.5% of XME.

AK Steel (AKS) posted a loss in the first quarter. However, its share price rallied 10% after the earnings release. Its share price moved up sharply from the 52-week low that it hit earlier this year. This can be seen in the previous chart.

Steel prices are a key driver for steel companies. In the next part of this series, we’ll analyze the latest trend in steel price.


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