Other risks include weaker economic data from China and changes in steel prices, says Lipschitz, who is bearish on the sector. The biggest concern for investing in steel companies right now is that their stock has had its move higher, Mazzaferro says.Ī lot of expected gains have already been priced into the stocks, Nelson says. 'Very rarely do you get a double-digit move,' he says.Ĭons. companies have been helped by tariffs imposed on some foreign steel producers and could see a 15 percent increase in shipping volume, Mazzaferro says. It looks like earnings will improve this year and next, he says.Īn advantage to investing right now is demand will start to improve at some point, even as supply is already keeping steel prices elevated and helping company earnings, says Credit Agricole Securities analyst David Lipschitz.Īlthough demand remains soft, U.S. The nature of the industry could be in favor of investors, says BB&T Capital Markets analyst Garrett Nelson. Steel stocks' bounce recently is a move off extremely low levels, and now could be a good time for longer term investors to get in, as there is more potential for demand to rise than to fall, says Macquarie Securities analyst Aldo Mazzaferro.īetween now and the third quarter, he sees American steel stocks surprising Wall Streetwith better-than-expected earnings.

Here's a look at the pros and cons of putting money into the steel sector. Share prices for steelmakers have been whipsawed since 2014 amid the vagaries of China's steel appetite, demand from the domestic automotive, construction and energy sectors and a trade battle over low-priced imports.Įxperts differ as to whether now is a buying opportunity and even whether steel stocks are worthy long-term investments or shorter term trades. Iron & Steel index is up 26.5 percent, but over the past year, the index is down 5.8 percent, with a big dip in the middle. The steel industry has been on a ride worthy of the roller coasters made with its product.

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