The resumption of construction, manufacturing, and industrial activities caused steel demand to surge and enabled an industry rebound last year. China’s production cuts to reduce its carbon emissions, followed by a significant decline in its exports, led to a supply crunch worldwide and pushed steel prices higher last year. The situation benefitted steel producers in other countries. But unfortunately, the war between Russia and Ukraine, two significant exporters of iron ore and steel products, has been raising new concerns about the global steel supply, driving steel prices higher.
As oil, natural gas, and electricity prices rise, domestic steel manufacturers are expected to raise their prices to meet rising input costs and capitalize on the growing global demand. Furthermore, significant funding from the bipartisan infrastructure bill passed last fall, and the easing of tariffs on steel imports from the EU and Japan, should drive the industry’s growth. Investors’ interest in this space is evidenced by the VanEck Vectors Steel ETF’s (SLX) 9% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) negative returns. The global structural steel market is expected to grow at a 4.5% CAGR to reach $979.20 billion by 2028.
