It's all about supply and demand. Too much steel and too few
people making use of it may threaten to send steel exchange traded
) prices lower in the coming months.
Both microeconomic and macroeconomic factors are expected to
take their toll on the steel industry, which may have a negative
effect on steel prices.
Kevin Grewal for ETF Daily News reports that
steel production on a global scale is up about 18% since 2009,
which has left the world with more than it knows what to do
On the demand side, global steel consumption decreased 3.4% in
June 2010 from a month earlier. Investment in steel-intensive
infrastructure and commercial and residential construction in China
has also slowed, which was a critical force in the global demand.
China also canceled export-tax rebates on some steel products to
avoid the need for imports and help stabilize prices. [
Steel ETFs Facing Headwinds.
As the Federal government has revised its GDP outlook to a
downward trend, the price of steel will have more downward pressure
put upon it. One possible source of support for steel could be
President Obama's plan to spend $50 billion on infrastructure. But
will that be enough? [
6 ETFs to Play Obama's Jobs Plan.
For more stories about steel,
our steel category
Market Vectors Steel ETF (NYSEArca: SLX):
SLX is 100% allocated to the United States; it's up 5.2% in the
last three months.
PowerShares Global Steel (NYSEArca: PSTL):
Japan, the United States and Brazil are the top countries in this
ETF; it's up 6.1% in the last three months.
Tisha Guerrero contributed to this article.