Weak global indicators

The steel industry was having a decent run in 2014. This was until the global meltdown started in October. Concerns over growth in China and Europe impacted the global steel industry. Share prices of steel plays fell sharply in October. Share prices, however, did rise sharply in the latter part of October.

Steel plays fall on weak global sentiment

November was a quiet month for steel plays with only sideways movement in most companies. This was until the important meeting of the Organization of Petroleum Exporting Countries (or OPEC). OPEC decided against reducing the crude output in this meeting, and then crude prices tanked.

The share prices of most steel plays also crashed after the OPEC meeting. The United States Steel Corporation (X) has seen its market capitalization erode by almost a quarter in the past couple of weeks. The above chart shows the share price movement of US steel companies. As you can see, most steel plays have had a horrid run on Wall Street. ArcelorMittal (MT) recently touched its 52-week low. AK Steel (AKS) is also down almost 50% from its peak.

Steel Dynamics (STLD) has held steady amidst this carnage. Its share price is up by ~15% year to date. Currently, it’s part of the SPDR S&P Metals and Mining ETF (XME).

What will we cover in this series?

In our recent series, we analyzed the key indicators of the US steel industry . Steel demand from most end consumers remains strong in the United States. However, weak global indicators have taken their toll on US steel plays. In this series, we’ll analyze the key global indicators that investors in steel companies should track.