Finder makes money from featured partners, but editorial opinions are our own.
Investing in steel stocks
What to know before investing in this staple engineering and construction material.
There are over 3,500 grades of steel that serve different purposes, from cars and washing machines to construction projects and surgical scalpels. Steel is a major player in construction worldwide, but significant issues will face the industry in the coming years.
What are steel stocks?
Steel stocks are companies that mine and manufacture steel products. The top three steel producing countries in the world are China, India and Japan.
Steel is an alloy made of mostly iron and up to 2% of carbon. It’s mainly used in construction, such as building infrastructure and tools, and household items such as sewing needles and canned foods.
Why invest in steel stocks?
Steel is a trusted and versatile construction material and is beloved for its durability, flexibility and low cost. Steel stocks perform well when the economy is strong.
In the past decade, China has seen explosive growth and maintains a high steel demand. Other large infrastructure projects around the world also up the demand for steel products, leading to higher profits and returns. And as the economy flourishes, the need for new buildings and construction continues to fuel the steel industry.
Risks of investing in steel
While steel currently plays a major part in our daily lives, there are specific risks involved in investing in steel and its uncertain future:
- Fewer large steel mills. The costly investment and environmental concerns — which prompted government policies like the 1970 Clean Air Act — have suppressed the construction of new steel plants.
- Steel alternatives. New building materials are gaining traction in new construction projects. For example, engineered timber is sustainable, a quicker, cleaner building material, and just as strong as steel.
- Recycled steel. You can recycle steel continuously without compromising its strength. The greater availability of recycled steel can reduce the prices of steel stocks, potentially eliminating the need for steel production in the next 30 years.
- Tariffs. Trade wars and tariffs can negatively affect steel stock prices. For example, the 2018 US tariffs against China imports, which were first imposed on steel and aluminum, are estimated to have cost US companies at least $1.7 trillion in stock prices.
What ETFs track the steel category?
Steel stocks include companies that manufacture metal products as well as those that produce and recycle steel.
A steel exchange-traded fund (ETF) holds securities that are connected to the steel industry. The only ETF that tracks steel is VanEck Vectors Steel ETF (SLX).
Compare trading platforms
You’ll need a brokerage account to invest in steel. Take a look at a few options below:
1 - 6 of 6
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
Bottom line
The steel industry is a staple in the world’s industrial economy. Steel stocks can be profitable when the economy is booming, but keep your eye on how tariffs and developments in the steel industry affect stock prices.
Compare trading platforms to start investing in steel.
Frequently asked questions
More resources on Finder
More guides on Finder
-
How to buy Yoshitsu Co. stock in Canada
Steps to owning and managing Yoshitsu Co. stocks, with 24-hour and historical pricing before you buy.
-
How to buy Cerberus Cyber Sentinel stock in Canada
Steps to owning and managing Cerberus Cyber Sentinel stocks, with 24-hour and historical pricing before you buy.
-
How to buy Fresh Grapes LLC stock in Canada
Steps to owning and managing Fresh Vine Wine, Inc stocks, with 24-hour and historical pricing before you buy.
-
How to buy Quest Diagnostics Incorporated stock in Canada
Steps to owning and managing DGX with 24-hour and historical pricing before you buy.
-
How to buy Nuvectis Pharma (NVCT) stock in Canada when it goes public
Everything we know about the Nuvectis Pharma IPO plus information on how to buy in.
-
How to buy BuzzFeed stock in Canada
Steps to owning and managing BuzzFeed, Inc stocks, with 24-hour and historical pricing before you buy.
-
Best renewable energy stocks
These are the best renewable energy stocks to buy now in Canada.
-
Can I buy AeroFarms stock?
A failed SPAC deal pulled the plug on this vertical farming company’s plans to go public. But you can buy stock in other sustainable farming companies.
-
How to buy Reddit stock in Canada when it goes public
Everything we know about the Reddit IPO plus information on how to buy in.
-
How to buy stocks in Canada
Want to know how to buy and sell stocks in Canada? Find out what you need to know in this simple, step-by-step guide.