President Biden’s proposed infrastructure spending bill is expected to turbocharge the demand for steel while facilitating transformational development in the U.S. economy. Though the bill is currently stalled in the Senate, the Biden administration is expected to push for its approval in the coming weeks. Hence, quality steel stocks Schnitzer Steel (SCHN) and United States Steel Corporation (NYSE:) could deliver significant upside in the near term. Plus, we think the recent price dips in these stocks represent a perfect buying opportunity. Let’s discuss.The infrastructure plan approved by the Senate less than two months ago is currently stalled because some Democrats refuse to support its passage unless an additional $3.5 trillion in welfare and climate change spending is approved. However, President Biden asserted that “we’re going to get it done” after a surprise visit to Congress last week.
Due to steel’s extensive use in construction, the potentially transformative infrastructure spending opens enormous growth prospects for the steel industry. Furthermore, with the economy’s reopening, increased construction and manufacturing activity should continue to drive steel demand. According to the World Steel Association, the global steel demand is expected to increase 3.8% year-over-year in 2021.
Given this backdrop, we think steel stocks Schnitzer Steel Industries (NASDAQ:) and United States Steel Corporation (X), which have suffered price declines lately, could now be great bets to cash in on the industry tailwinds.
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