August 13, 2008 at 2:00 pm by Tom Lydon
Exchange traded funds (ETFs) could reap the rewards as the Russians add to their presence in the U.S. steel industry.
In the biggest takeover of the year within the global steel industry, Novolipetsk of Russia is buying out John Maneely of Ohio for $3.5 billion. John Maneely is not an actual steel maker, but is one of the largest pipe and tube manufacturers in the United States, with products used in plumbing, scaffolding and electric wiring, reports Stephen Beard for Marketplace.
Analyst Henry Cook believes these companies make a great fit, as Russia is a low-cost place to make steel products. These products can then be exported back to the States, where John Maneely can add value.
This gives Russian steel makers even more presence in the United States. They control nearly 10% of the U.S. steel-making capacity.
ETFs sure to gain strength:
- Market Vectors Russia (RSX): down 18.3% year-to-date; Novolipetsk is 4.4%; 26.5% weighted in industrial metals
- Market Vectors Steel (SLX): down 9.8% year-to-date
- SPDR S&P Metals and Mining (XME): down 5.4% year-to-date; weighted 74.1% in materials
Tags: Emerging Markets, Metals & Mining, RSX, Russia, SLX, XME
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