Steel producers from various countries benefited substantially in 2021 owing to the heightened demand for steel from rebounding industrial and construction activities and its high prices worldwide. The price hike was caused by a production cut by major steel producer and exporter China, in an effort to reduce its carbon emissions. Moreover, the ongoing war between Russia and Ukraine – two significant exporters of iron ore and steel products – has been raising concerns about the global steel supply and surged prices further lately.
As a result, domestic steel companies are expected to witness heightened demand. Moreover, the passage of the bipartisan infrastructure bill, which provides significant funding to improve America's infrastructure, 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 evident from the VanEck Vectors Steel ETF’s (SLX) 6% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) negative returns. The steel market is expected to grow at a 3.5% CAGR to reach $1.43 trillion by 2028. Therefore, Cleveland-Cliffs Inc. (CLF) and United States Steel Corporation (X) should benefit.
