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Best Steel Company Stock

Best steel company stocks to buy

If you are looking for information about steel company stocks, you came to the right place! In this article I will provide you with a list of steel company stock that will help you decide if stocks in certain niches are interesting as an investment.

What is an steel company stock?

An steel company stock is an investment in shares of the steelmaking company. The ore grade, costs of metal extraction and other factors can make profitable some projects to produce iron or steel while others are not so much, so there is a crucial role for doing correct research among different companies before investing.

If you have a basic understanding about the steel industry and want to know if these stocks are good, keep reading and you will se the information I gathered about some of them.

What does a steel company do?

Steel processing is one of the most important industrial activities used in modern society and has a critical impact on daily life as we know it today. Most items that contain iron or steel (steels) are made using steel products, including countless ordinary household objects.

The steel industry offers jobs to millions of people around the world and is one of the largest economic sectors in terms of overall production value. Worldwide steel output was about 1.6 billion tonnes in 2015, an increase from 1.5 billion tonnes at the end of 2010 according to International sources.

Why invest in steel company stocks?

Numerous reasons can be mentioned for investing in steel company stocks, but the first thing that comes to my mind is related with the economic growth. As I will show it later, on this article you can find information about companies that took part on significant development of countries. So if you want to invest on something that supports it’s economy, might be an interesting choice.

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Advantages steel company stock

Numerous advantages can be mentioned for steel company stocks, but in my opinion the following are the most important ones:

  1. Opportunities for growth during an uptrend or bear market.
  2. They tend to pay consistent dividends.
  3. Steel companies often generate steady cash flow.
  4. It’s easy to understand what these kind of companies do.

Disadvantages steel company stocks

Some disadvantages could be listed as well, among them the following are important ones:

  1. It can be relatively expensive to trade in steel company stocks because even if they are correlated with other metals, volume tends to be much smaller.
  2. Highly volatile, but if you hold the position long enough, it’s normally for a good return.

The best steel company Stocks Of 2021

We made a list of the best steel company stocks to invest in for the next 5 years. We analyzed all the steel company stock from different niches and made a list of those that have one or more important characteristics: good dividend yield, high expected growth rate, great assets under management (AUM) and low risk.

  1. Rio Tinto Group (NYSE:RIO)
  2. Commercial Metals Company (NYSE:CMC)
  3. Encore Wire Corporation (NASDAQ:WIRE)
  4. Perpetua Resources Corp. (NASDAQ:PPTA)
  5. POSCO (NYSE:PKX)

1. Rio Tinto Group (NYSE:RIO)

Rio Tinto Groupe S.A., also known as Rio Tinto or Rio Tinto Group, is a British-Australian multinational and one of the largest metals and mining corporations in the world. The company is headquartered in Melbourne, Australia and their stock market ticker on NYSE is RIO.

The company has more than 150 years of experience in developing mines, exploring for natural resources, processing minerals, and finding new markets for its products. The company also has experienced leadership in many business areas including the automotive industry, agricultural industries, energy barrier materials for oil drilling and mining equipment.

2. Commercial Metals Company (NYSE:CMC)

Commercial Metals Company, or CMC, is a supplier of carbon steel products in North America. The company operates through two segments: Steel Manufacturing and Distribution.

CMC produced 873 thousand tons of steel products in 2016. They are the third largest recycler in the US (after Greif and Schnitzer).They established their headquarters in Downtown Houston, Texas.CMC was founded in 1902 to serve the needs of the fast-growing oil industry in West Texas and South Texas.

3. Encore Wire Corporation (NASDAQ:WIRE)

Encore Wire Corporation is a North American manufacturer, fabricator and distributor of steel wire products serving the utility, energy and communication industries. The company operates through two segments: Steel Wire Products and Value-Added Services.

They have a wide portfolio of steel lattice structures that they provide to the utility industry for use in transmission towers, substations and transmission line construction. In 2013 they have been acquired by Berkshire Hathaway, a multinational holding company based in Omaha, Nebraska.

4. Perpetua Resources Corp. (NASDAQ:PPTA)

Perpetua Resources Corp. operates as a holding company, which engages in the exploration and development of mineral properties. It involves in the exploration and development of gold deposits, platinum group metals (PGM) projects, and base metal deposits such as nickel. The company was founded by Walter Schmidt in April 2000 and is headquartered in Calgary, Canada.

5. POSCO (NYSE:PKX)

POSCO is a steel-making company headquartered in Pohang, South Korea. The company was founded as Pohang Iron and Steel Company Limited (PISCO) on December 1, 1958. In 1972 the company changed its name to POSCO.

In 2005 they became a public listed company with an IPO of their A class shares at SEOUL Exchange. They provide a wide range of steel products for construction and manufacturing sectors including:

  • Steel beams
  • Plates/coils
  • Pipes
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How to invest in steel company stocks?

Necessary things to consider before investing in any company from the steel industry:

  1. The economy of a country or a region must have a strong performance. You should check how much the steel industry contributes to the GDP of a given nation
  2. Also keep an eye on political instability and changes in regulations related to exports.
  3. The price of steel is going to have a direct relationship with the future profits of all steel companies, so you should check if the price of steel is stable or something else. A strong corporate governance can reduce risks for investors and shareholders.

Should you invest in steel company stocks?

Yes, you should definitely consider investing in steel company stocks. Although many people think that the steel industry is dying, it’s still a huge industry and there are many opportunities for profit. As mentioned above, some of the world’s largest and most profitable companies are steel manufacturers!

If you want to invest in steel company stocks, I would recommend that you buy shares of the companies mentioned above. You can also check out steel sector ETFs or mutual funds if you want to diversify your portfolio and lower risk.

Conclusion about steel company stocks

The conclusion we can make about steel stocks is that although the steel industry is under pressure, there are many opportunities to make great profits if you invest in the right companies. Make sure that you compare all available brokers which are trading steel company stocks. Check our comparison with all fitting offers.


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Frequently asked questions

The only steel ETF now active to trade is the VanEck Vectors Steel ETF (SLX). SLX tracks the NYSE Arca Steel Index. Some of this ETF’s top holdings include Rio Tinto, ArcelorMittal, Vale, and Posco.

In 2020, China’s Baowu Group was ranked as the world’s largest steel producer. China Baowu Group produced around 115 million metric tons of crude steel that year, close to 37 million metric tons more than ArcelorMittal, which was second in the ranking.

Another reason that steel will continue to be used in the future is that it’s a renewable resource. Steel also plays a major part in building wind turbines, and as renewable wind energy becomes more and more widespread, more steel will be needed. Steel is also expected to continue to be used in buildings.

Demand for steel dropped at the beginning of the coronavirus pandemic, but then it quickly skyrocketed. At one point, steel prices were 300% above their pre-pandemic levels at more than $1,900 per ton. Globally, steel demand in 2021 is expected to increase by 3.8% over 2020, according to the World Steel Association.

Steel Companies have been making a strong comeback. Rapid rise in production, robust recovery in demand and record high selling prices have nudged steel players on a profitable path. The stock prices of major steel producers have been on the up and up.

Let’s take a look at the options available to those who want to invest in the steel sector:

  • Commodity Exchange Traded Funds (ETFs)
  • Common Stocks and Mutual Funds.
  • Futures and Options.
  • Bullion.
  • Certificates.

Generally the entire financial storyline in a steel company revolves around the prices of coking coal and iron ore as raw materials and the top line in a steel company depends on prices per ton of steel as driven by market forces, the producers are in no position to set steel prices nor in a position to negotiate on.

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