Stronger third quarter earnings have boosted the steel sector and solidified the uptrend for the exchange traded fund Market Vectors Steel Index Fund (NYSEArca: SLX). U.S. Steel (NYSE: X), the nation’s largest steelmaker, has posted two consecutive quarters for profit.
“The stocks are up because of the good economic news,” Michelle Applebaum, analyst with Steel Market Intelligence, said on Reuters. “Reliance beat, and they had a great third quarter, but their guidance for the fourth quarter was short.”
Reliance Steel $ Aluminum Co. (NYSE: RS ) reported sales at $2.14 billion, up 29%, and shares rose to $43.08, which gained $10 over the October rally, reports Reuters.
U.S. Steel posted a profit of $22 million as steel prices were higher in the third quarter. Demand could wane for steel if developed economies continue to slowdown, reports Associated Press on The Washington Post.[Will Steel Dynamics Earnings Reinforce ETFs?]
“In the U.S., the the company is 80% self-sufficient in coke and almost completely self-sufficient in iron-ore. This vertical integration gives the company a cost advantage over its competitors as it sources the majority of its raw materials at cost and mitigates cost volatility,” wrote Bridget Freas for Morningstar. [The Contrarian: A Look at oversold ETFs]