Materials like steel (HVH26) are notoriously volatile, as most Barchart readers know. But steel is also viable as a trading asset.
These days, I track it through the VanEck Steel ETF (SLX). This industry tracker is approaching its 20th anniversary. You can see top holdings here, including Nippon Steel (NPSCY), which has acquired US Steel among the 39 stocks on the SLX. It is concentrated because most of the industry is ETFs, with more than 60% in its top 10 holdings. The fund is not huge, at $200 million. But it has been a strong performer at times.
SLX provides investors and traders with an objective view of the global steel industry by tracking a basket of companies involved in steel production, fabrication, and iron ore mining. The narrative for the steel sector is currently dominated by infrastructure-led demand and a structural shift towards higher capital transfers to green steel production.
The bull case for SLX is driven by a significant rebound in global demand, which is expected to grow moderately in 2026, around 1%-3%. This growth is being fueled by major infrastructure projects in the US and India along with stabilizing manufacturing activity in Europe. The industry is also benefiting from “green premium” varieties, as environmental regulations increase demand for low-carbon steel produced in electric arc furnaces.
Beer’s case focuses on continued weakness in China’s real estate sector and the resulting volatility in commodity prices. China remains the world’s largest producer and consumer of steel, and the ongoing housing slowdown continues to weigh on global iron ore sentiment. While Chinese production is expected to fall by around 4.5% in 2026 due to tighter environmental controls, the threat of a glut of Chinese steel on global markets is a primary concern for Western producers.
Additionally, steelmaking remains a very energy-intensive business. Any sudden increase in energy costs or a disruption in coking coal supply could quickly erode the gains of the cyclical companies that dominate this ETF.
This is an extended trend in ETF prices. And it looks like it’s priced to drop. The Percent Price Oscillator (PPO) has just crossed a very high level. And without using fancy technical terms, maybe we can agree that when an entire industry doubles in less than 12 months like SLX just did, it’s only “rich” that much.
