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Steel prices are currently at historic highs, with China cutting back production and rising demand with the resumption of construction activities. American Iron and Steel Institute CEO Kevin Dempsey expects 5 million tons of additional steel demand for every $100 billion in new infrastructure investment. In addition, steel’s prospects are promising, with the global steel market expected to grow at a 4.1% CAGR to 2.2 billion metric tons by 2026.
Therefore, we think steel stocks, Usinas Siderurgicas de Minas Gerais S.A. (Usiminas) (USNZY), Champion Iron Limited (CIAFF), and Mechel PAO (MTL), which are currently trading below $5, should be solid buys now, given their fundamental strength. These stocks are rated ‘Buy’ in our proprietary POWR Rating system.
