The VanEck Vectors Steel ETF (NYSEArca: SLX) has been a surprise (and impressive) performer among industry exchange traded funds this year, surging more than 45% after a couple of years of dismal showings.
Steel is finally making a comeback after years of underperforming. The slowdown in China was the main culprit in dragging on the steel sector, reports Abigail Stevenson for CNBC. The weaker economy translated to a diminished demand for steel.
Some steel industry analysts are increasingly bullish on the sector, including some of the specific names found in SLX, such as United States Steel Corp. (NYSE: SLX) and AK Steel (NYSE: AKS).
“We remain very bullish on the US steel industry and our new supply / demand model for the US flat rolled market indicates continued deficits for value add sheet into 3Q-16, supporting prices well above fair value levels,” according to an excerpt of a Credit Suisse note posted by Ben Levisohn of Barron’s.[related_stories]
However, since the start of March, U.S. steel has been gaining ground when Congress passed a new customs and trade enforcement bill that allowed the Obama administration to take action against Chinese dumping. The Department of Commerce imposed a 265.79% tariff on Chinese steel, according to the Wall Street Journal.
Credit Suisse boosted its rating on AK Steel to outperform from market perform.