Steel companies’ 2016 performance
In the previous parts of this series, we’ve looked at steel companies’ 2015 price movements. We’ve seen that companies including United States Steel Corporation (X), AK Steel Holding Corporation (AKS), ArcelorMittal (MT), and Steel Dynamics (STLD) are trading near multiyear lows amid the broader rout in the commodity sector. In this part of the series, we’ll look at the different factors that could drive steel companies’ 2016 performance.
There are four key factors that could drive steel companies’ 2016 performance:
- How the Chinese slowdown plays out in 2016
- The trend in US steel demand, including service center buying activity
- Movement in US spot steel prices, as well as contract steel price movement
- The impact of anti-dumping duties on US steel imports
In the coming parts of this series, we’ll explore how each of these factors might play out in 2016 to get a better understanding of the US steel industry’s 2016 outlook. We’ll begin by looking at how Chinese steel demand could shape up in 2016. China’s economic slowdown is the biggest challenge for global metal and mining companies, which is why steel investors should keep a close eye on the Chinese economy.
Investors who want to avoid the hassles of picking individual stocks can consider the SPDR S&P Metals and Mining ETF (XME). Currently, XME has almost half of its holdings invested in US-based steel companies.