Utilities and Steel vs Natural Gas stock correlation
In Europe we are having a massive energy crisis due to high natural gas prices since the beginning of this month, due to which Oil & Gas companies are having a rally.
Natural Gas is the main component to the production of steel (def. in EU). With a rise in the input (gas price), I would expect a an increase in operating costs of the steel producer, which should mean decrease in margins, reduction of profitability and an eventual decrease in steel price. Moreover there is a decrease in steel demand from China, which should bolster a downward trend of Arcelor Mittal stock.
Could you guys explain this trend of steel prices following natural gas price?
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Quentrell : you def need to read up more on steel and what is happening.
- MT does not export to China, so no loss there (on the contrary China is exporting less so great for MT)
- energy does chance the production cost but this cost is baked into the end price, no real loss there
- two fine words : super cycle