Global steel demand is rebounding from its pandemic-driven lows and is expected to regain pre-pandemic levels this year. In addition, the Infrastructure Act signed into law in November has the potential to be a huge tailwind for the steel industry. Given this backdrop, Wall Street analysts see a more than 25% upside in the stocks of steel companies Ternium (TX) and United States Steel (NYSE:X). Read on.The steel industry is gaining traction as industrial and building activities rebound from pandemic-driven lows. Steel demand is increasing significantly, and analysts expect global steel demand, excluding China, to reach pre-pandemic levels this year. The World Steel Association (Worldsteel) has forecasted world steel demand to grow 4.5% in 2021 and 2.2% in 2022 to reach 1,896.4 Mt.
In November, President Biden signed the Infrastructure Investment and Jobs Act into law. Of $1.2 trillion in infrastructure spending provided by the bill, some $850 billion is for steel-containing infrastructure investment. The American Iron and Steel Institute (AISI) has estimated that for every $100 million in infrastructure investment, demand for domestic steel might rise as much as 5 million tons.
Given this backdrop, Wall Street analysts expect fundamentally solid steel stocks Ternium S.A. (TX) and United States Steel Corporation (X) to rally by more than 25% in price in the near term.