You may regard this steel ETF as a global steel ETF covering all major steel market sectors. It goes without saying that the steel industry is heavily depended on market conditions. A global economic downturn will cause demand to falter and prices to decline.
Adding to that is a lower capacity utilization degree. High costs will continue but turnover and prices decline. To make things even worse in these downturns is the high debt ratio these companies tend to work with. Not a sunny outlook for investors.
The result is obvious, investors part with their stocks and prices tumble sharply. That is in times of trouble of course. If the global economy is booming this market shines like no other star. With occupancy rates nearing 100% prices will shoot up and company profits soar.
You will understand immediately the name of the game in trading this steel ETF, getting in on a low, a considerable amount of patience and reaping nice profits, easier said than done of course.
VanEck Vectors Steel ETF
This VanEck Vectors Steel ETF is the most important ETF to trade the global steel companies. You will find steel manufacturers and blast or melting furnaces in this steel ETF but you will also find iron ore mines.
Looking at the regional spread of this steel ETF you will find the US is leading the pack here with a 40% share. Europe is good for 25%. South America comes in third, especially due to its mining sector. Looking at single companies Rio Tinto and Vale both have a share of 13%. Third is Tenaris with a 7% share.
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VanEck Vectors Steel ETF info:
ETF provider: VanEck Vectors (van Eck Global)
Exchange: NYSE Arca