Back to top

Zacks Industry Outlook Highlights: Nucor, Commercial Metals, United States Steel, ArcelorMittal, and Steel Dynamics

Read MoreHide Full Article

For Immediate Release

Chicago, IL – August 31, 2017 – Today, Zacks Equity Research discusses the Industry: Steel, Part 2, including Nucor Corp.(NYSE: (NUE - Free Report) – Free Report), Commercial Metals Company(NYSE: (CMC - Free Report) – Free Report), United States Steel Corp.(NYSE: (X - Free Report) – Free Report), ArcelorMittal (NYSE: (MT - Free Report) – Free Report), and Steel Dynamics Inc. (NASDAQ: (STLD - Free Report) – Free Report).

Industry: Steel, Part 2


Steel is used in every important industry ranging from energy, construction, automotive and transportation, infrastructure, packaging and machinery. Expectations of increased infrastructure-related spending in the United States have thrust steel company stocks to new highs, particularly following the November 2016 election.

There are plenty of reasons to be optimistic about the broader steel industry, both in the short and long term. Here, we discuss some of the key reasons and what investors in the steel sector can look forward to in the coming months and years.

The “Trump” Card

After being in the dumps for a major part of 2016, steel stocks got a big boost following Donald Trump’s win in November on expectations of significant infrastructure spending in a Trump administration. The president’s call for the massive infrastructure spending is likely to have a beneficial effect on the steel industry given the expected increase in steel demand, as it is a key component in many infrastructure products. Trump’s “big” spending plans have thus painted a bullish picture for steel companies.

Construction Sector Remains a Pillar of Strength

The homebuilding market remains a pillar of strength for the economy, along with the steel industry. The housing and construction sector is the largest consumer of steel, accounting for almost half of the total consumption. Positives like an improving economy, healthy job growth, low interest rates, positive consumer confidence and a tight supply situation raise optimism about the sector’s performance.

The US Architecture Billings Index (ABI), an economic indicator that provides an approximately nine to 12 month glimpse into the future of non-residential construction spending activity, has been at 50 or better for major part of the last year indicating reliable, manageable and sustainable growth in architectural activity. The American Institute of Architects (AIA) anticipates spending in the non-residential building sector to advance around 6% in 2017. Nucor Corporation (NYSE: NUEFree Report) and Commercial Metals Company (NYSE: CMCFree Report) are the leading steel suppliers to the non-residential construction sector.

Over the long haul, as the urban population increases worldwide, the need for steel to build skyscrapers and public transport infrastructure should see an uptrend as well. Emerging economies will continue to be major catalysts, owing to the huge amount of steel required for urbanization and industrialization. Hence, demand for steel is anticipated to remain strong in the years to come. Companies like United States Steel Corp. (NYSE: XFree Report), ArcelorMittal (NYSE: MTFree Report), Nucor Corporation and Steel Dynamics Inc. (NASDAQ: STLDFree Report) would benefit from momentum in construction.

Steel to Ride on Demand from Automotive Sector

The automotive sector, which is the second largest steel consumer, is showing significant promise despite threats from other materials. Besides giving a boost to the already rising U.S. auto sales, cheap oil has backed a recovery in the European auto market. The rising sales trend is anticipated to persist on the back of falling fuel prices, low interest rates, enhanced job security, rising wages and household wealth. Moreover, the trend will be backed by improving consumer confidence, residual pent-up demand, attractive deals and vehicle launches.

Moreover, the high average age of light vehicles on U.S. roads is resulting in large replacement demand for cars as well as car parts. This will benefit auto parts manufacturers and retailers. The auto industry in Asian countries, particularly China and India, are also projected to flourish over the next five to seven years. China is the biggest and fastest growing auto market in the world in terms of number of vehicles sold.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.

Get the full Report on NUE - FREE

Get the full Report on CMC - FREE

Get the full Report on X - FREE

Get the full Report on MT - FREE

Get the full Report on STLD - FREE

Follow us on Twitter:

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

More from Zacks Press Releases

You May Like