Global steel prices could rocket higher in the new year.
For one, Tata Steel’s CEO T.V. Narendran expects steel prices to run even higher from current prices. In fact, he says, “I expect to see steel prices at a much higher level than we’ve seen in the last 10 years, over the next 10 years,” as quoted by CNBC.
Two, global steel demand is on the rise thanks to the Infrastructure Act signed into law in November.
Also, remember, of the $1.2 trillion in the bill, nearly $850 billion was set aside for steel investments.
“This could translate into as much as 40 million st to 45 million st of steel demand over the life of the projects, according to the AISI. Looking at just new funding, the AISI estimates an increase of as much as 20 million st to 25 million tons of steel over the life of the authorized projects,” according to the American Iron and Steel Institute (AISI).
That being said, investors may want to pay close attention to these three steel stocks.
Cleveland-Cliffs Inc. (CLF)
Over the last few weeks, there’s been a considerable amount of insider buying. Chairman, President, and CEO Lourenco Gonclaves for example bought 50,000 shares for $1 million.
Chief Financial Officer Celso Goncalves bought 10,000 shares for $206,500. Keith Koci, president of Cleveland-Cliffs paid $218,270 for 10,000 shares. In addition, Director Ralph Michael III bought 10,000 shares for $201,000. All after the stock just pulled back to strong support dating back to May 2021. Even better, there’s solid growth at CLF.
Q3 2021 consolidated revenues came in at $6 billion from $1.6 billion year over year. For the first nine months of 2021, it recorded revenues of $15.1 billion and net income of $2.1 billion, or $3.69 per diluted share. A year earlier, it posted revenues of $3.1 billion and a net loss of $155 million, or a loss of $0.51 per diluted share, as reported in a company press release.
U.S. Steel (X)
US Steel recently crushed earnings and raised its dividend. In its most recent quarter, the company reported adjusted EPS of $5.36 on $6 billion in sales. The Street was looking for adjusted EPS of $4.87 on $5.8 billion in sales. US Steel also hiked its dividend from a penny to five cents, and announced it would buy back $300 million in stock.
“We continue setting records, including record net earnings, record Ebitda, record Ebitda margin, record liquidity, record safety, and record quality and reliability,” said CEO David Burritt, as quoted by Barron’s.
Steel Dynamics (STLD)
After pulling back to solid support around $60.13, STLD is gaining traction. From a current price of $62.80, we’d like to see STLD test prior resistance around $67.50, near-term.
Better, the company anticipates seeing adjusted EPS of $5.69 to $5.73, as compared to analyst expectations for $5.62.
In addition, according to a company press release, “The non-residential construction sector remains strong as evidenced by robust order activity, resulting in another record order backlog and record forward-pricing for the company’s steel fabrication platform. The company anticipates this momentum to continue through 2022 based on these dynamics.”
