Supported by stimulus from government and rebounding market, metal prices have risen sharply since their lows in the aftermath of the pandemic. Current iron and steel prices have reached historic heights. Additionally, President Biden intends to conclude an infrastructure deal before the end of the month. Iron and steel firms should take advantage of the possible spending. Given this backdrop, we think it could be wise to buy low-priced iron/steel stocks of Usiminas (OTC:), Champion Iron (CIAFF), and Mechel PAO (MTL), which are rated ‘Strong Buy’ or ‘Buy’ in our POWR Rating system.
The COVID-19 pandemic had a negative impact on the metal market last year. It caused severe declines in metal prices and slowed demand. Supply chain disruptions caused by the closure of mines and budget cuts also affected this sector. However, the industry’s rebound has so far been better than expected, with iron ore prices reaching historic highs, driven primarily by government stimulus.

Current steel prices have reached historic heights due to China’s reduction in production and the rising demand for it with the return of construction. Kevin Dempsey, CEO of American Iron and Steel Institute, expects that $5 million more steel will be needed for each $100 billion invested in infrastructure. Steel’s future prospects look bright, as the global steel market is expected to expand at 4.1% to 2.2 million metric tons in 2026.

We think that steel stocks are the best. Usinas Siderurgicas de Minas Gerais S.A.(Usiminas), Champion Iron Limited, (CIAFF), Mechel PAO, and Mechel PAO, which trade below $5 at the moment, are solid investments. This is due to their strength. These stocks are rated ‘Buy’ in our proprietary POWR Rating system.

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