The prospects of the steel and iron industry are largely tied to the health of the global economy. The challenging global economic scenario that had for so long taken a toll on the iron and steel industry seems to be bottoming out. The U.S. economy has also been showing a gradual recovery.
Fears of a slowdown in the world’s second-largest economy, China, seem to have eased thanks to its latest positive numbers. Its neighbor, India, is also making its presence felt in the global steel market due to increasing urbanization. However, the Euro zone still continues to be an overhang.
Overcapacity has been a perennial problem for the industry and has significantly affected steel prices. Margins consequently came under pressure for the steel players. However, a reviving economy, strong momentum in the automotive market, and renewed vigor in construction activity, particularly in China, India and emerging markets, are sure to drive steel prices northward.
— Zacks Investment Research