“Much of the fund’s strength comes not from steel producers but from miners of iron ore, the mineral that’s purified and eventually turned into steel. Rio Tinto (RIO), Vale (VALE) and Vedanta (VEDL) have been on strong upward price trends for more than a year. They’ve surged roughly 95% to 350% from early 2016 lows,” adds IBD.
Rio Tinto and Vale combine for nearly 30% of SLX’s weight.
The SPDR Metals & Mining ETF (NYSEArca: XME) is an alternative to SLX. XME is not a dedicated steel ETF but features ample exposure to that industry.
XME has been benefiting from rebounding areas of the mining industry that were previously punished, including gold, coal and steel. Many industrial metals and miners rallied on the belief that China would support growth through stimulus measures, augmenting demand for metals while enticing investors to jump back in.
For more information on the steel industry, visit our steel category.