Steel ETF Could Feel Weight of Increased Production

| About: VanEck Vectors (SLX)

In combination with a recovering global economy will be increased demand for steel. Why, then, are steel prices and ETFs expected to see declines this month?

Steel production has been stepped-up big time. Mills in China, the biggest driver of global steel prices, and Eastern Europe are producing record amounts, says Robert Guy Mattthews for The Wall Street Journal.

The timing for the increased production isn’t great. It comes amid signs that the world’s economies may not be on a strong upswing, prompting worries that supply will outpace demand and restrain prices just as they were beginning to rise.

The end result could be steel prices that fall at least 5% this month.

Production of steel is so strong that ArcelorMittal (NYSE:MT) is weeding out its less-efficient operations, and shutting down less productive plants. Many insiders are watching local markets and making sure that output keeps in pace with demand.

  • Market Vectors Steel (NYSEARCA:SLX)

Tisha Guerrero contributed to this article.

Disclosure: None