Meanwhile, emerging economies such as China and Brazil are developing cities and urbanizing. India is another large economy that actually saw growth in steel production every year from 2007-2010. The demand is likely to continue to grow even in tougher economic conditions, reports Dutram.
There are two ETFs that offer different plays on the steel industry, both globally and domestic:
- PowerShares Global Steel Portfolio (PSTL): This ETF holds 70 companies from around the globe; about 12% is allocated to the U.S., 37% in Asian companies, and 34% in European companies. Due to steel’s global trading nature, geographic issues matter less with this ETF, says Morningstar’s Goldsborough.
- Market Vectors Steel (SLX): A market-cap weighted fund that focused in on 26 U.S. domiciled companies. The fund is a good play for investors that are bullish on long-term growth hot spots such as Brazil and China. Goldsborough further states that SLX is a hedge against U.S. dollar exposure, while even U.S. domiciled steel companies benefit from a weak greenback.
Market Vectors Steel
Tisha Guerrero contributed to this article.