The steel industry has been surging lately given the possible tariff talks on foreign producers of steel and aluminum in the interest of national security. Trump is looking to impose severe tariffs of 24% on steel imports and 10% for aluminum imports.
Additionally, President Donald Trump’s latest statement on reviving the industry has bolstered the confidence in the growth of the steel industry. Per Reuters, “Trump wants to bring the steel industry back to America even if his administration will apply tariffs to imports from other countries.” Trump has until Apr 11 to decide on the new steel tariffs, and Apr 16 for aluminum restrictions.
The new tariff will likely curb excess global steel production capacity, especially in China, pushing steel prices higher. This has resulted in a spike in global steel stocks. In fact, many of them like U.S. Steel (X – Free Report) , Steel Dynamics Inc. (STLD – Free Report) , Gerdau S.A. and Ternium S.A. (TX – Free Report) skyrocketed to a new one-year high in the past week.
Given this, the only pure play VanEck Vectors Steel ETF (SLX – Free Report) is also hitting new 52-week highs. The ETF has returned 12.8% so far this year easily outperforming the broad material fund’s (XLB – Free Report) gain of 1.3%. Let’s take a closer look at the characteristics and fundamentals of SLX in detail.
SLX in Focus
This fund provides exposure to a small basket of 27 stocks by tracking the NYSE Arca Steel Index. It is highly concentrated on the top firm, Rio Tinto (RIO – Free Report) , at 11% of assets while other securities hold no more than 8.9% share. This suggests that company-specific risk is high. The product primarily focuses on large caps as it accounts for 45% of the assets while the rest are evenly split between mid and small caps.
American firms dominate the fund’s returns at 37.2%, followed by Brazil (19.1%), the Netherlands (13.3%) and United Kingdom (11.1%). The ETF has amassed $177.6 million in its asset base and charges 55 bps in fees from investors. It trades in moderate volume of 64,000 shares a day on average.
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