Is now a good time to invest in steel companies?

Question

Im looking to put some money in ArcelorMittal (MT) and Companhia Siderurgica Nacional (SID). Would now be a good time to buy in due to the recent drops in steel, or should i be waiting a while longer?

Answer 1

A couple of things to consider.

The big iron ore producers, Rio, BHPB and Vale have just secured massive price increases for their product, some as high as 97%. This makes steel very expensive and the contracts are all for one year.

There is a huge commodity boom at the moment but just recently (last 2 weeks) there are some signs of slowdown.

China has slowed markedly in the last few months so the massive demaind for steel that was coming from there may dimish a lot in the next few months.

With these three things in the wind I am a little uncertain about the prospects of steel going forward. Maybe better to leave it for a while and just watch the market.

Good luck, Hope this helps, Jackson.