The demand for steel and other metals has dramatically fallen in all geographic markets and sectors, resulting in devastation to the stock prices of metals companies and the exchange traded funds (ETFs) that track the sector.  However, recent revelations may turn out to be beneficial for the industry.

This drop in demand in all geographic locations, markets, and sectors, especially the transportation, building, and infrastructure sector, has taken its toll on the industry.  Companies such as SSAB have cut payroll and workforce by 14%, and U.S. Steel (X) has cut production, stopped utilizing all facilities and trimmed its payroll, states the Associated Press.

Despite this, it appears that the tables for the metals industry may turn.  President-elect Barack Obama unveiled a huge public works stimulus package which outlined a massive increase in infrastructure spending, resulting in a surge in the demand for metals and an improvement in the outlook for these commodities.

In addition to the stimulus plan, the potential $15 billion bailout of the automotive industry, the weakening of the dollar against the euro, making dollar based commodities cheaper, and the announcement of a slash in capital expenditure budgets by mining companies Anglo American (AAUK) and Rio Tinto (RTP) added to the surge in the industry, states Reuters.

SPDR S&P Metals and Mining ETF (XME): is down 62.4% year-to-date.

Market Vectors Steel Index ETF Fund (SLX): is down 38.29% year-to-date; Rio Tinto is 12.7%

Tags: Industrial Metals, Infrastructure, Metals & Mining, Obama, Sector ETFs, SLX, Steel, XME