Buy These 2 Stocks As Steel Prices Continue To Soar

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The global lockdown and subsequent social distancing restrictions compelled by the COVID-19 pandemic caused the steel industry to plummet over the first two quarters of 2020. The near halt in industrial and manufacturing activities in China contributed significantly to a global supply glut because China is the world’s largest consumer of steel. With excess reserves and falling prices, global steel production fell 1.4% year-over-year in the first quarter of 2020.

However, as the global economy has gradually reopened and the demand for steel has picked back up, the steel industry is poised to make a strong comeback. With a rise in demand from the automotive industry, which is the largest consumer of steel, crude steel production has increased 4.8% year-over-year to 162.9 million tonnes in January 2021, according to a report released by the World Steel Association.

President Biden’s proposed $2 trillion infrastructure initiative is expected to contribute significantly to the steel industry’s long-term growth. Furthermore,  the Coalition of American Metal Manufacturers and Users has urged Biden to terminate Section 232 tariffs on steel and aluminum, arguing that that the tariffs imposed by the previous administration have negatively impacted the industry.

Based on these factors,  we believe steel stocks  ArcelorMittal S.A. (MT - Get Rating) and Olympic Steel, Inc. (ZEUS - Get Rating) will benefit from a rise in demand based on their diverse market reach.

ArcelorMittal (MT - Get Rating)

Based in Luxembourg MT owns and operates steel, iron ore manufacturing, and coal mining facilities in Europe, North and South America, Asia, and Africa. The company operates through five segments — NAFTA, Brazil, Europe, Africa, and Commonwealth of Independent States (ACIS), and Mining. MT sells its products to various customers in the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization and through distributors.

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