The Zhitong Finance App learned that since steel prices have reached new highs recently, Goldman Sachs expects steel companies' EBITDA profit margins to peak in the next few quarters. The bank advises investors to “remain selective and find high-quality targets in the steel sector that can drive profit margin expansion.”

The bank's analyst Emily Chieng gave Nucor Steel (NUE.US), Schnitzer Steel (SCHN.US), and Steel Dynamics (STLD.US) “buy” ratings, gave Cliff Natural Resources (CLF.US), Reliance Steel (RS.US), and American Steel (X.US) a “sell” rating.

Chieng said that due to strong potential demand, lagging supply, and low inventory operation, the steel industry is currently enjoying the benefits of metal prices at record highs. “Although we expect the upward trend in steel prices to ease in the second half of 2021, considering that demand in 2022-23 is 1%-3% higher than the five-year average, steel prices may be in a new normal higher than historical levels.”