Asset allocation model
The basic materials sector is home to a variety of companies acquiring, developing, and processing raw materials, including mining, lumber, and refining companies. One major sub-sector under the basic materials umbrella is steel – the most commonly used metal in the world. The industry has experienced its ups and downs amid a slowing global economy and trade concerns, but remains of interest to investors for its positive outlook in developing economies.The World Steel Association projects that demand for steel in emerging economies apart from China is expected to grow in coming years, with Asia and Latin America both projected to be responsible for growth in the future. Constructing and manufacturing growth in the U.S. is expected to abate, though demand growth could improve with better trade relations.Major steel manufacturers include American companies U.S. Steel, Nucor, and Steel Dynamics. While each has endured mixed fortunes, these companies have been introducing new technologies that are helping them weather up and down cycles. Brazil-based Vale and Gerdau SA have experienced positive results in recent years and are poised to capitalize if that country’s economy improves.