The Zacks Steel Producers industry is poised to benefit from an uptick in steel prices this year. A resilient non-residential construction market and recovering demand in the automotive space also act as tailwinds for the industry. 

Rising U.S. steel prices have created a favorable landscape for American steel producers. Tightened supply and higher end-market demand are expected to support steel prices. Players from the industry, such as ArcelorMittal S.A. (MT Quick QuoteMT - Free Report) , Steel Dynamics, Inc. (STLD Quick QuoteSTLD - Free Report) , Commercial Metals Company (CMC Quick QuoteCMC - Free Report) and Companhia Siderurgica Nacional (SID Quick QuoteSID - Free Report) , are set to benefit from these trends.

About the Industry

The Zacks Steel Producers industry serves a vast spectrum of end-use industries, such as automotive, construction, appliance, container, packaging, industrial machinery, mining equipment, transportation, and oil and gas, with various steel products. These products include hot-rolled and cold-rolled coils and sheets, hot-dipped and galvanized coils and sheets, reinforcing bars, billets and blooms, wire rods, strip mill plates, standard and line pipe, and mechanical tubing products. Steel is primarily produced using two methods — Blast Furnace and Electric Arc Furnace. It is regarded as the backbone of the manufacturing industry. The automotive and construction markets have historically been the largest consumers of steel. Notably, the housing and construction sector is the biggest consumer of steel, accounting for roughly half of the world’s total consumption.

What's Shaping the Future of the Steel Producers' Industry?

A Recovery in Steel Prices Bodes Well: Steel prices started 2025 on a weak note, continuing the softness witnessed in late 2024. The Trump administration's imposition of a 25% tariff on all steel imports into the United States in March 2025 led to a surge in benchmark hot-rolled coil (HRC) prices to a peak of nearly $950 per short ton. While the administration's early June doubling of steel tariffs to 50% and the consequent steel mill price hikes triggered only a temporary lift, it failed to effectively drive up HRC prices further to new highs as intended. Overall demand weakness and abundant steel mill output put a pause on a sustained price rally, dragging HRC prices below $800 per short ton in late August and continuing through early September. On a positive note, HRC prices improved in the fourth quarter of 2025 on major steel mills' price hikes amid a recovery in construction and automotive demand, extending lead times and tightening supply, partly due to plant outages. The recovery, which has been more pronounced since November, has led to HRC prices surging past $900 per short ton. With end-market demand improving, steel prices will likely continue to climb, benefiting U.S. steelmakers with higher profit margins.

Steady Demand in Major Markets: Automotive is a significant market for steel producers. A slowdown in global automotive production curtailed steel consumption in this key end market last year. High interest rates, along with concerns over economic slowdown and tariffs, put pressure on the automotive market. The automotive market is expected to rebound this year, driven by the adoption of electric vehicles as governments globally push for carbon neutrality. Improving affordability, strong demand for hybrids and aggressive promotional incentives are expected to drive new vehicle sales. Steel demand in the automotive sector is gaining traction lately, and the recovery momentum is likely to continue this year as auto build rates increase. Order activities in the non-residential construction market remain strong, underscoring the inherent strength of this industry. Infrastructure projects in the United States are on the rise, driven by government initiatives to upgrade transportation and utility networks. Firm demand in non-residential construction is expected to continue in 2026. In the energy space, pipeline and drilling activities remain steady, aiding demand for tubular steel. 

Sluggishness in China a Concern: Steel demand in China, the world’s top consumer of the commodity, has softened due to a slowdown in the country’s economy, following a protracted property crisis and weak global demand. The real estate sector has taken a hard hit amid a decline in new home prices, property investment and housing sales. Notably, real estate accounts for roughly 40% of China's steel consumption. A slowdown in manufacturing activities has led to a contraction in demand for steel in China. The manufacturing sector has taken a beating due to weaker external demand for manufactured goods and a slowdown in infrastructure spending. China has also seen a slowdown in the construction sector. The sluggishness in these key steel-consuming sectors is expected to hurt demand for steel over the short term. 

Zacks Industry Rank Indicates Upbeat Prospects

The Zacks Steel Producers industry is part of the broader Zacks Basic Materials Sector. It carries a Zacks Industry Rank #110, which places it in the top 45% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates a bright near-term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Outperforms Sector and S&P 500

The Zacks Steel Producers industry has outperformed both the Zacks S&P 500 composite and the broader Zacks Basic Materials sector over the past year.

The industry has gained 48.2% over this period compared with the S&P 500’s rise of 16.9% and the broader sector’s increase of 31%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, which is a commonly used multiple for valuing steel stocks, the industry is currently trading at 14.95X, below the S&P 500’s 18.68X and the sector’s 15.04X.

Over the past five years, the industry has traded as high as 14.95X, as low as 2.77X and at the median of 8.98X, as the chart below shows.

Enterprise Value/EBITDA (EV/EBITDA) Ratio

Enterprise Value/EBITDA (EV/EBITDA) Ratio

4 Steel Producer Stocks to Watch

Commercial Metals: Texas-based Commercial Metals manufactures, recycles and markets steel and metal products, related materials and services. It is gaining from the robust demand in North America for each of its major product lines. Commercial Metals’ focus on augmenting its core capabilities while expanding growth in markets, customer groups and applications will aid growth. CMC is implementing price rises across its mill products, which should aid growth. The acquisition of CP&P creates a scalable platform for CMC in a fragmented industry with strong profit margins. Commercial Metals has also inked a deal to acquire Foley Products Company for a cash purchase price of $1.84 billion. This buyout will provide CMC with an immediate platform scale in a strategically attractive industry. CMC’s strong liquidity, financial position and focus on reducing debt through a strategic capital allocation approach also augur well.

Commercial Metals has an expected earnings growth of 125.2% for fiscal 2026. The Zacks Consensus Estimate for fiscal 2026 earnings has been revised upward by 21.3% over the last 60 days. CMC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: CMC

ArcelorMittal: Luxembourg-based ArcelorMittal is among the leading integrated steel and mining companies globally. MT is expanding its steel-making capacity and focusing on shifting to high-added-value products. Its strategic expansion projects are expected to boost profitability and cash flows. MT is optimizing its decarbonization strategy to maintain competitiveness and profitability. The company is committed to returning shareholders’ value while maintaining a strong balance sheet. Its cost-improvement efforts are also expected to support margins.

ArcelorMittal currently carries a Zacks Rank #3 (Hold). The company beat the consensus estimate for earnings in three of the trailing four quarters. In this time frame, it has delivered an average earnings surprise of roughly 20%. MT has an expected earnings growth of 45.1% for 2025.

Price and Consensus: MT

Steel Dynamics: Based in Indiana, Steel Dynamics is a leading steel producer and metals recycler in the United States. Steel Dynamics' customer-focused approach, along with market diversification and low-cost operating platforms, positions it for future growth opportunities. The company should also gain from its investments in beefing up capacity and upgrading facilities. STLD is seeing strong customer order activity for flat-rolled steel. It is currently executing several projects that should add to its capacity and boost profitability. 

STLD is ramping up operations at its new state-of-the-art electric arc furnace flat-rolled steel mill in Sinton, TX. The value-added flat-rolled steel coating lines, consisting of two paint lines and two galvanizing lines, also enhance the annual value-added flat-rolled steel capacity. The company is ramping up volumes from these lines, which are expected to provide earnings benefits. 
  
Steel Dynamics carries a Zacks Rank #3. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters. In this time frame, it has delivered an average earnings surprise of roughly 2.5%. STLD has an expected long-term earnings growth of 17.8%.

Price and Consensus: STLD

Companhia Siderurgica Nacional (National Steel): Brazil-based National Steel is one of the largest fully integrated steel producers in Brazil and Latin America, in terms of crude steel production. SID has been benefiting from its geographically diversified portfolio and acquisitions. Geographical diversification and a solid product portfolio, which includes hot- and cold-rolled flat steel, galvanized sheets and tin plates for the packaging, automotive and construction industries, provide it with a competitive edge. The company also gains from strong demand in its cement business in residential and civil construction projects, which is expected to boost its sales and production. Its focus on investment in infrastructure should also aid growth.

National Steel, currently carrying a Zacks Rank #3, has an expected earnings growth rate of 138.9% for 2025. The consensus estimate for 2025 earnings has been revised upward by 250% over the last 60 days.

Price and Consensus: SID