The rising demand for steel amid reduced supply from China and expensive import tariffs have led to a triple-digit rally in steel prices over the past 16 months. And because demand is expected to continue rising with the Senate’s passage of the $1 trillion infrastructure bill, Wall Street analysts expect steel stocks Gerdau S.A (GGB) and Schnitzer Steel (SCHN) to gain more than 50% in price. Read on. The fast-paced global macroeconomic recovery and resumption of industrial and manufacturing activities have revived the demand for steel worldwide. In addition, steel import tariffs in the United States and reduced steel production volume in China, which is the world’s largest steel manufacturer, have resulted in steel prices rising more than 200% since March 2020, as of July 9.
A recent, Senate-approved $1 trillion infrastructure bill, which allocates $110 billion for building roads and bridges, is expected (if passed into law) to drive steel demand in the United States over an extended period. Also, to make the U.S. steel industry more competitive, domestic steelmakers have asked President Biden to remove the import tariffs.
Steel prices are expected to increase in the coming months, given the rising market demand and current supply bottlenecks. Thus, Wall Street analysts expect shares of steel manufacturers Gerdau S.A. (GGB) and Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) to rally by more than 50% in the near term.