Steel stocks are some of the biggest gainers in the past two months. After a few months of flatness, many steel stocks are finally surging and hitting new highs.
A good benchmark for steel prices is the Dow Jones US Steel Index, which tracks major steel producers. We can see in the chart below how the index reached yesterday a new two-year high after a very bullish move.
Indeed, we already warned of this potential move two weeks ago when we pointed out that “the index has been consolidating over the past five months and it might be ready to move up sometime this year.”
What This Means For Metal Buyers
We have already seen some industrial metals turning upward in 2014. If these developments continue and the metal sector keeps moving up, steel won’t be left behind. Steel stocks have a strong correlation with steel prices. This bullish move in steel-related stocks should warn steel buyers to expect higher steel prices throughout the rest of the year.