President Biden's $1.2 trillion infrastructure bill, which is intended to propel the U.S. economy to transformative growth, bodes well for the steel industry. Furthermore, output cuts imposed by the world's largest steel producer, China, have lately pushed steel prices to all-time highs. In this scenario, we believe it may be wise to bet on iron ore stocks BHP Group (NYSE:BHP) and Vale S.A (VALE) because they are poised to benefit from the steel price rally. Read on.The industrial metals sector is on track to reclaim its pre-pandemic levels with the reopening of industrial activities around the globe. Also, the Biden administration's $1.2 trillion bipartisan infrastructure framework, which the Senate passed recently, bodes well for the industrial metals sector.
Since steel is widely used in construction and manufacturing, Biden’s proposed spending could be a transformational investment that will afford steel producers great growth opportunities. Furthermore, because China has vowed to limit steel output this year to curb industrial pollution, steel prices are soaring.
And because this spike in steel prices is likely to continue in the near term, we think iron ore stocks BHP Group (BHP) and Vale S.A (VALE) could be ideal bets to cash in on the uptrend.