Shares of steelmaker United States Steel (X -1.67%) are 6% higher today, as of 1:15 p.m. EST, after a 10% jump earlier in the day. The stock has been on a remarkable run since the beginning of October, with shares more than doubling.
The recent run began after rival Cleveland-Cliffs (CLF -1.60%) made a surprising acquisition at the end of September, announcing it acquired ArcelorMittal USA, the U.S. assets of global steelmaker ArcelorMittal (MT -0.26%).
The acquisition added to industry consolidation that Cleveland-Cliffs began when it bought AK Steel earlier in 2020.
Consolidation in the industry will likely benefit U.S. Steel and other domestic steelmakers. But investors are also sensing that the Biden administration may contribute to a resurgence in the steel market from ramped up spending on infrastructure repair.
President-elect Joe Biden has said he plans to add "millions of construction, skilled trades, and engineering workers to build a new American infrastructure and clean energy economy."
A boon in renewable energy may sound like it would be unsympathetic to the steel industry. But any infrastructure project will need a huge volume of steel supply. Solar panel fields and wind farms specifically require steel sheet, plate, and connectors.
If the new administration increases spending to upgrade highways, roads, and bridges, and also spurs the construction of renewable energy projects, the domestic steel industry will be a big winner.
Investors are catching on to that, and the stocks of suppliers like U.S. Steel are getting renewed interest as those projects come closer to fruition.