What happened

Shares of steelmaker Steel Dynamics (STLD -0.08%) gained an impressive 22% in March, according to data from S&P Global Market Intelligence. It wasn't an isolated advance, however, as all of the major U.S. steel companies' stocks rose materially during the month. There were company-specific and industrywide catalysts here.

So what

On March 17, Steel Dynamics provided an update on its first-quarter 2021 expectations. The company earned an adjusted $0.97 per share in the final quarter of 2020, but expects to see adjusted earnings come in between $1.94 and $1.98 in the just-ended quarter. In the year-ago period it earned $0.88 per share. So the upcoming quarterly earnings release is likely to be very good reading, which is something investors were obviously pleased to hear.  

A man standing in front of hot sparking steel.

Image source: Getty Images.

However, that's just one piece of the puzzle when looking at the March gains. The other factor was the increasingly positive expectations surrounding the infrastructure spending plans of the Biden administration. Although details of the plan didn't actually hit until the very end of the month, speculation was that it would be big, which helped to drive up the share prices of steel companies like Steel Dynamics.  

Now what

Relatively young Steel Dynamics is a well-run steel company and has been an investor favorite in the sector as it has grown. The truth is it didn't get as much of a boost from the infrastructure spending issue as some of its peers, with more leveraged names like U.S. Steel and Cleveland-Cliffs witnessing even bigger stock advances. Still, Steel Dynamics will likely benefit from increased infrastructure spending just like its peers and investors are probably right to be excited here. That said, nothing is set in stone yet, so there's a chance that investors are counting their chickens before any eggs have hatched.