This article is written exclusively for Investing.com
Shares plunged from February 2018 to March 2020
A rebound over the middle of the movement
Inflationary pressures wipe out all commodities – Iron ore and steel prices have risen since March 2020
US Infrastructure Rebuilds Bullish for US Steel: Earnings Trend and Forecasts
Levels to watch in the volatile stock
One of my all-time favorite movies is the Godfather series. In Godfather II, mobster Hyman Roth says to Michael Corleone, referring to their nefarious operations in the US and Cuba, “We are bigger than US Steel.”
Hyman Roth was a fictional mobster based on Meyer Lansky, a prominent American organized crime figure. Lansky, along with his associate, Charles "Lucky" Luciano, played an important role in developing a national crime syndicate in the United States. The Godfather's rule was an example of fiction meeting fact, as Lansky reportedly made that statement, comparing his company to US Steel, to his wife while watching a news report about the mafia.
In Lansky's heyday, United States Steel (NYSE:) was a leading American company. As of August 30, 2021, X's market cap was just over $7.46 billion, with its share at the $27.06 per share level. If Lansky wanted to compare his company to a leading company today, he would probably choose Apple (NASDAQ:), valued at over $2,456 trillion.
Meanwhile, US Steel has made quite a comeback in the past year. The stock plunged to its lowest level in decades in March 2020 when it hit $4.95 per share, and its market cap plunged well below the $2 billion mark. ]
In late February 2018, US Steel shares peaked at $47.64, where they fell.
Source: bar chart
As the chart above shows, X made lower highs and lower lows, falling to $4.54 per share in March 2020, less than a tenth of its price two years earlier.
At the peak of sales, due to the global pandemic, X appeared to be heading for bankruptcy, but the company survived. Investors who bought the shares near the 2020 low were even richly rewarded.
A rebound beyond the midpoint of the movement
The midpoint price from the February 2018 high to the March 2020 low is $26.09 per part. Over the past 17 months, US Steel has made an incredible recovery as inflationary pressures reversed the outlook for the market.
Source: bar chart
The chart shows that X climbed to its most recent high on August 18, at USD 30.57 and was trading at the USD 27.06 level on August 30. The two-year decline in price ended early 2020, and X has been on an upward trend for nearly a year and a half.
Inflationary pressure cancels out all commodities; Iron ore, steel prices have risen since March 2020
Iron ore is the main ingredient in steel. The price of the commodity has been nothing short of explosive since the low of $61.57 per tonne in April 2020.
Iron Ore Monthly 2011-2021
Source: bar chart
The chart above shows the price reaching a high of $219.77 per tonne in July 2021, more than three and a half times the price at the April 2020 low. At nearly $149 as of August 30, it was still still more than double the price at the bottom.
Steel prices have risen along with many other commodities since they bottomed out in early 2020.
Source: LME
The chart shows that steel forward HRC North America rose from $460 in April 2020 to its most recent high of $1868.50 per short ton. Late last week, the price was just below its all-time high at $1859 per short ton. The rise in steel prices was very optimistic for US Steel stocks.
