Why Steel ETF Is Showing Renewed Strength

Apr.19.09 | About: VanEck Vectors (SLX)

After a severe drop in orders last year, steel, along with related its related ETF, may start to pick up as large economies increase consumption.

China, the world’s largest consumer of copper and steel, looks to be recovering and demand for steel is likely to grow, according to Forbes.

During the sudden reversal of economic conditions last year, steel plummeted on reduced orders from automotive, construction and industrial equipment markets.

Prices for steel have been steadily dropping and steel companies are cutting production. Some investors fear higher Chinese export subsidies may cut global steel prices. Outside of China, production has dropped 37% compared to last year, and it has fallen to levels last seen in 1967.

Credit Suisse upgraded the steel sector weighting to overweight from benchmark after citing a recovering China, which accounts for around 35% of global steel demand, reports Donna Kardos for The Wall Street Journal.

  • Market Vectors Steel ETF (NYSEARCA:SLX): up 15.1% year-to-date; up 41.2% in the last month

ETF SLX performance

Max Chen contributed to this article.