Ways to Play Steel in an Economic Recovery

Includes: IYM, SLX
by: Tom Lydon

110_F_2372111_X5XYeW2vnfYZaSyqEFc8NOPQwogZj3Steel has a wide range of uses across a variety of industries, which puts the steel exchange traded fund (ETF) firmly into position to benefit as a global economic recovery continues apace.

Steel is fundamental to a broad economic recovery, getting much of its strength from manufacturing, auto makers and infrastructure development. Furthermore, steel is inversely related to the U.S. dollar, which some feel will remain weak despite recent signs of strength, reports Kevin Grewal for TheStreet. [Read about steel's correlation to the auto industry.]

As China continues to deplete its steel inventories, more demand will be created and this may drive prices higher. Meanwhile, analysts have upgraded the steel sector from neutral to attractive. As steel continues to under perform the broader market, the bullish sentiment will continue to due to the lowered share price. [Why steel has been upgraded.]

For more stories about steel, visit our steel category.

  • Market Vectors Steel (NYSEArca: SLX): up 107% year-to-date

  • iShares Dow Jones U.S. Basic Materials (NYSEArca: IYM): up 61% year-to-date

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