The growing demand for steel with the reopening of industries worldwide amid China’s production cuts is driving steel prices to record highs. But rising investments in infrastructure and construction projects make the industry’s prospects bright. Therefore, we think steel stocks Cleveland-Cliffs (NYSE:CLF) and United States Steel (NYSE:X) should achieve substantial growth in the coming months. But which of these stocks is a better buy now? Let’s find out.Cleveland-Cliffs Inc. (CLF) in Cleveland, Ohio, and Pittsburgh, Pa.-based United States Steel Corporation (X) are two leading producers of steel and steel products in the United States. CLF is vertically integrated from mined raw materials and direct reduced iron to primary steelmaking and downstream finishing, stamping, tooling, and tubing. It serves automotive, industrial, and manufacturing industries, and steel producers by offering flat-rolled steel products, custom-made pellets, and hot briquetted iron (HBI). X, in comparison, is an integrated steel producer that sells steel products, including flat-rolled and tubular products, railroad services, and real estate operations, primarily in North America and Europe. It serves automotive, construction, consumer, electrical, industrial equipment, and service center/distribution markets.
Amid surging demand due to the resumption of infrastructure and construction activities worldwide, China’s decision to cut steel production and exports has created a global supply crunch. Thus, steel prices have been soaring. Also, a bipartisan infrastructure bill in the U.S. Congress, if passed, should drive the demand for steel over the next few years and benefit domestic companies significantly. The global IF Steel market size is expected to grow at 5.3% CAGR to $61.48 billion by 2025. So, both CFL and X should benefit.
But while the shares of X have declined 3.2% in price over the past six months, CLF has surged 20.4%. CLF is a clear winner with 184.2% gains versus X’s 155% returns over the past year. But which of these stocks is a better pick now? Let’s find out.