3 Steel Stocks To Get You Through The Market's Troubles

The S&P Steel Index is gaining in 2025, buoyed by a combination of tariff leverage, robust balance sheets, and strong returns on capital.

Year to date, the S&P Steel Sub-Industry Index is up 8.40% as of June 12, as the US steel sector stabilizes. It has room to grow over the short term after President Trump's decision to double US steel tariff imports from 25% to 50% as of June 4, 2025, following a new executive order.

But tariffs aren’t the only reason steel stocks are rising.

The trade policy shift, announced in late May during a rally at a U.S. Steel factory near Pittsburgh, immediately sent steel stocks soaring, with Cleveland-Cliffs CLF rising 26% in a single day following the announcement, while Steel Dynamics STLD and Nucor NUE saw gains of 10-11%. "The tariffs effectively raise the price floor for steel in the U.S. market by making imported steel significantly more expensive," said Tracy Shuchart, senior economist at NinjaTrader in New York City. "According to market data, benchmark steel prices have already increased from $725 per metric ton before the tariff announcement to $875 per metric ton currently."

It’s not only tariffs that are supporting steel industry gains.

"Steel's rally is a mix of short-term catalysts and long-term structural forces," said Dan Buckley, chief analyst at DayTrading.com. "US tariffs are boosting expectations for domestic producers, while sustained federal spending on infrastructure and reshoring is aiding durable demand."

"Add in supply chain restocking, auto sector recovery, and disciplined capital returns from top players like Nucor and Steel Dynamics, and the sector is showing a more stable profile," Buckley added.

The tariff portion of that equation may not have a long shelf life, so investors should proceed cautiously. Talks between the U.S. and Mexico are already underway to curb the 50% tariff figure.

"For example, the two countries are exploring a quota system that would allow a specific amount of Mexican steel to enter the U.S. duty-free or at lower rates, with only excess amounts subject to the full 50% levy," Shuchart noted. "This negotiation explains why some steel stocks like Nucor fell 6.1% on June 11, as investors reacted to the possibility of tariff exemptions. The European Union has also strongly opposed the increased tariffs, warning of potential countermeasures."

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Investors should factor in other supportive steel sector impactors also driving industry stocks forward. Shuchart points to infrastructure investment, where ongoing and planned infrastructure projects drive demand for steel products across the United States.

Domestic construction activity is up, too, and in high-growth areas.

"Despite higher interest rates, commercial construction remains relatively robust, supporting demand for structural steel," Shuchart said. "Additionally, key steel-consuming industries like automotive and machinery manufacturing have shown surprising resilience in 2025, and the expansion of renewable energy infrastructure requires significant steel inputs, creating a new demand source for the industry.”

With a strong tailwind from U.S. government policy and solid fundamentals from the steel sector in place, which steel stocks make the most sense for investors right now? These three steel plays could add a profitable element to your portfolio.

Nucor

Trading at $121 per share and 4.4% over the past month, Charlotte, N.C.-based Nucor NUE, a steel products manufacturer, also offers a sturdy 1.82% dividend yield.

"Despite recent volatility due to potential Mexico tariff negotiations, Nucor remains the premier U.S. steel producer with industry-leading margins, a strong balance sheet, and consistent dividend growth," Shuchar said. "Its EAF production model provides cost flexibility, and its diverse product mix offers exposure to multiple end markets."

Steel Dynamics

At $133 per share and with a 1.50% dividend yield, Steel Dynamics STLD is up a healthy 16.7% year to date. However, the stock (like Nucor) is down moderately this week after the US-Mexico tariff negotiations went public. Wall Street is buzzing over those talks, which could center on reducing or even removing the 50% tariffs to a lower amount based on historical trade volumes.

Yet there's a lot to like about Steel Dynamics, which, like Nucor, offers investors operational efficiency and one of the lowest production cost structures in the industry. "The company has been expanding its value-added product portfolio, which should support margins even if base steel prices moderate," Shuchar said.

ArcelorMittal

Buckley is bullish on the Luxembourg-based ArcelorMittal MT, which engages in steelmaking and mining activity. "MT adds global diversification" to the manufacturing section of an investment portfolio," Buckley said. MT shares are up 30.6% year to date at $30 per share with a 1.55% dividend yield.

MT could also benefit from Nippon Steel's purchase of US Steel. Under an agreement inked in October 2024, ArcelorMittal is set up to purchase Nippon's 50% share in a joint venture deal for $1. In addition, MT will deep-six $1 billion of joint venture shareholder loans in an agreement that JP Morgan analyst Dominic O'Kane called a "major positive" for ArcelorMittal.

Look for Solid Fundamentals with Steel Stocks

Don't hit any "buy" buttons on steel stocks until you grasp a company's underlying fundamentals, even if the tariff wars seem to be working out in your favor.

Buckley said investors should prioritize key factors with steel companies. In his view, the best steel investments combine:

• Cost-efficient production.
• Strong returns on capital.
• Strong balance sheets (i.e., low net debt, high-interest coverage, ample cash reserves, stable working capital, prudent capital expenditure discipline).
• Quality net margins (i.e., a ~5% net margin is a solid baseline for this sector, and a 7- 10% range is excellent).

"Industry companies with high-margin, value-added products and sustainable dividend growth are best, rather than chasing commodity pricing volatility compared to the overall market," Buckley said. "Overall, steel stocks are less about chasing trends and more about aligning with the economic security playbook we're seeing as a geopolitical theme."

Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.

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