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Tickers in this Article: MT, X, NUE
The U.S. suto industry is going through a bit of a reorganization, and the credit facilities used to support ongoing and new infrastructure development are drying up. Couple this with a slowdown in construction development and negative economic sentiment we have the makings for a slowdown in demand for steel.

The lull in the steel market makes this the perfect time to explore steelmakers planning to forge ahead into 2009.

Steel shipments have fallen by 4.2 metric tons during its most recent third quarter ending September 30 from the same period a year ago, but ArcelorMittal's (NYSE:MT) shipments for the first nine months of 2008 increased to 84.6 million metric tons from 81.7 million metric tons a year ago. Despite the headwinds of the global economy and the instability of the U.S. automotive market, Arcelor's board has decided to maintain its dividend at $1.50 for 2009. Arcelor represents around 10% of world's steel output with 116 million tones suggesting that a resurgence of infrastructure improvements in developed nations and build outs in emerging markets would give the steel producer plenty of room to grow.

United States Steel
U.S. Steel (NYSE:X) is fresh off the acquisition after United States Steel Canada (USSC) paid approximately $36 million for three Nelson Steel pickle lines at the end of August. Pickling is the process of removing black oxide from steel that has been hot rolled or basically heated up to the point were it can be shaped and reformed. The additional revenue from USSC and United States Steel Europe (USSE) along with high per-ton prices for steel helped push total net sales up 56% over the same period a year ago to $19.3 billion. Reduced production levels are expected to carry over into the new year given the slowdown in global economic activity. (To learn why companies consolidate, read our Mergers and Acquisition Tutorial.)

Earlier this month Nucor (NYSE:NUE) announced its 143rd consecutive increase of its quarterly cash dividend. Given the support of steel prices rising 51% from $738 in the third quarter of 2007 to $1,111 in the third quarter of 2008, Nucor has been able to keep its dividend growth intact while focusing on growth through acquisition. Nucor's $1.44 billion acquisition earlier this year of its long time ferrous scrap broker David J. Joseph is a part of its downstream focus aimed at eliminating costs and creating a foundation for growth. By acquiring its scrap broker, Nucor has eliminated its largest single expense. Nucor does not have a particularly rosy forecast for the near future due to the fallout of the financial crisis.

Final Thoughts
Steel is a product most may not think of on a daily basis even though its strength is at the core of the buildings we work in, the cars we drive and the homes we live in. Steel stocks are expecting difficult times ahead, but not the end of times. Investors searching for a way to play a future rebound in infrastructure may want to consider steel's essential role in development.

For more on steel stocks, read Build Your Portfolio With Infrastructure Investments.

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