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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
Name Product CAFST Finder Rating Available Asset Types Stock Trading Fee Account Fee Signup Offer Table description
Interactive Brokers
Finder Score:
★★★★★
4.2 / 5
Stocks, Bonds, Options, Index Funds, ETFs, Currencies, Futures
min $1.00, max 0.5%
$0
N/A
Winner for Best Overall Broker in the Finder Stock Trading Platform Awards.
CIBC Investor's Edge
Finder Score:
★★★★★
3.7 / 5
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, Precious Metals, IPOs
$6.95
$0 if conditions met, or $100
N/A
An easy-to-use platform with access to a variety of tools to help you trade with confidence.
Moomoo Financial Canada
Finder Score:
★★★★★
3.9 / 5
Stocks, Options, ETFs
$0.014/stock
$0
Enjoy 6% cash rebate plus $2,200 in trading perks
Trade US stocks for up to 90% less and access free real time stock quotes and level 2 market data. T&C's Apply.
RBC Direct Investing
Finder Score:
★★★★★
3.8 / 5
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
$6.95 - $9.95
$0 if conditions met, otherwise $25/quarter
N/A
Enjoy no minimum trading activity requirements and pay just $9.95 per trade or $6.95 if making 150 trades per quarter.
Questrade
Finder Score:
★★★★★
3.9 / 5
Stocks, Bonds, Options, Mutual Funds, ETFs, Forex, GICs, Precious Metals, IPOs
$4.95 - $9.95
$0
N/A
Opt for self-directed investing and save on fees or get a pre-built portfolio to remove some of the guesswork.
Qtrade Direct Investing
Finder Score:
★★★★★
3.6 / 5
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
$6.95 - $8.75
$0 if conditions met, otherwise $25/quarter
Get 1% cashback or more, a $100 sign-up bonus & unlimited free trades until December 31, 2024. Use code SUMMERBONUS2024.
An easy-to-use platform with access to powerful tools and a wide selection of investment options and account types.
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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.

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Kimberly Ellis is a personal finance writer at Finder, specializing in banking and financial literacy. After teaching in public and private schools, Kimberly zeroed in on personal financial education to help families and kids develop lifelong money skills. She hails from New York City, graduating summa cum laude from Queens College with a BA in elementary education and mathematics, as well as a New York State teaching certificate. She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick. See full bio

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Kimberly has written 10 Finder guides across topics including:
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