4 Steel Producer Stocks In Focus as Industry Gains on Price Recovery

Industry Overview - The Zacks Steel Producers industry is expected to benefit from rising steel prices, driven by a resilient non-residential construction market and recovering automotive demand [1][2] - The industry serves various end-use sectors, including automotive, construction, and energy, with steel being a critical component in manufacturing [3] Steel Price Trends - U.S. steel prices have increased due to tightened supply and higher demand, with benchmark hot-rolled coil (HRC) prices recovering to over $900 per short ton in late 2025 [4] - The recovery in steel prices is attributed to improved demand in construction and automotive sectors, alongside supply constraints from plant outages [4] Demand Dynamics - The automotive sector, a significant market for steel, is expected to rebound due to the rise of electric vehicles and government initiatives for carbon neutrality [5] - Non-residential construction demand remains strong, supported by infrastructure projects in the U.S. [5] - However, steel demand in China has softened due to economic slowdown and a decline in the real estate sector, which accounts for about 40% of China's steel consumption [6] Industry Performance - The Zacks Steel Producers industry has outperformed both the S&P 500 and the broader Zacks Basic Materials sector, gaining 48.2% over the past year compared to the S&P 500's 16.9% [9] - The industry currently holds a Zacks Industry Rank of 110, placing it in the top 45% of over 250 Zacks industries, indicating positive near-term prospects [7] Valuation Metrics - The industry is trading at a trailing 12-month EV/EBITDA ratio of 14.95X, which is below the S&P 500's 18.68X and the sector's 15.04X [12] Company Highlights - Commercial Metals Company (CMC): Expected earnings growth of 125.2% for fiscal 2026, with a strong focus on expanding market presence and implementing price increases [15][16] - ArcelorMittal (MT): Anticipates earnings growth of 45.1% for 2025, focusing on high-value products and maintaining a strong balance sheet [20][21] - Steel Dynamics (STLD): Expected long-term earnings growth of 17.8%, benefiting from capacity expansions and strong customer order activity [24][26] - Companhia Siderurgica Nacional (SID): Expected earnings growth rate of 138.9% for 2025, with upward revisions in earnings estimates due to strong demand in construction [28][29]