Hi,
Today we are talking about steel!
Now back in the day I’ve written on steel in specific twice:
Once on Twitter back in Feb’2022 warning against steel stocks
Once in Oct’ 2022 when I went down into why steel didn’t perform
And I’ve also talked about commodity stocks in general before:
Today, we are talking steel again, but from a different angle; can it come back?
Let’s begin
All views are personal and for educational purposes only, please do your own research before investing and trading
Steel Prices
If you go through the charts above, here are a couple of pointers to take away:
They’ve been on the downturn since 2021
Steel prices today are close to the 10Y average
They’ve recently rebounded from 1Y and 5Y lows
Now can steel prices can go back higher? that’s tough to guess today, but the takeaway here is that the probability of them going below further is low.
Steel stocks Charts
Looking at the charts of JSW steel and Tata Steel as proxy for steel stocks - JSW recently made a new high and has its momentum turn positive as evident by 30EMA > 90 EMA, similarly Tata steel also has been tending upwards with its momentum turning positive on the same metric (although it debateable whether it has broken out of its longer term downturn just yet).
Simply put, both show a changing trajectory in steel stocks.
Steel stocks financials summary
Steel stocks started to bear the brunt of falling steel prices in June of last year, a trend which continued till march’23 when the performance did start to come back on the top line (due to a spike in steel prices as evident in the steel chart above) but it wasn’t large enough to translate a similar sized impact into EBITDA and the Profits, which still, while better, lagged.
Conclusion
With steel prices falling closer to their 10Y average and lows of 5Y, steel stocks started to gain positive momentum alongside some improvement in their financials, perhaps it’s time to look closer into steel stock and keep them in the watchlist as there does seem to be a good chance that steel as a sector can make a comeback.
Until next time, keep manifesting wealth.
Disclaimer 1: All above views are purely for educational purposes and are not to be taken as investment advice. Investment or trades taken of any kind based on this are solely the person’s risk and I bear no liability. Please consult a financial advisor before making any investments. All investments are subject to market risks.
Disclaimer 2: The views presented above are mine and not of any organization(s) I work with / am employed at
Sources:
Trading View
Trading Economics
TickerTape