By Stockpickr Staff
Posted on May 19, 2009

Steel, an essential element for world growth, plays a critical role in both developed and developing nations' strategies to improve infrastructure and domestic transportation systems. In fact, from 2000 to 2007, world steel demand increased by 6% a year; for an almost 50% increase in world demand in just eight years.

According to the World Steel Association, the largest steel producers are:

1. ArcelorMittal (MT), 116 million metric tons
2. Nippon Steel, 35 million metric tons
3. JFE Holdings, 34 million metric tons
4. Posco (PKX), 31.1 million metric tons
5. Shanghai Baosteel Group, 28.6 million metric tons
6. Tata Steel, 26.6 million metric tons
7. Anben Iron and Steel Group, 23.30 million metric tons
8. Shagang Group, 22.9 million metric tons
9. Tangshan Iron & Steel Group, 22.8 million metric tons
10. United States Steel (X), 21.5 million metric tons

So how does steel play out in the stock market? With this in mind, Stockpickr has compiled a Top Steel Stocks portfolio.

ArcelorMittal (MT) is both the world’s largest steel producer, and the world’s largest publicly traded steel producer.

U.S. Steel (X) is the largest domestic producer of steel. U.S. Steel's iron ore mines are located in the U.S., giving the company a significant operational and cost advantage over other domestic producers.

Nucor (NUE), based in Charlotte, N.C., is the 12th-largest steel producer in the world, producing 20 million metric tons. The company specializes in industrial grade steel for bridges, tunnels and machines.

AK Steel (AKS), based in West Chester, Ohio, is another large domestic steel producers, focusing principally on carbon stainless steel and electrical steel. Recently, AK Steel suggested that it may idle its Ashland, Ky., plant because a slump in demand might force production cuts.

Schnitzer Steel (SCHN) and Commercial Metals (CMC) also make the portfolio as second derivative plays on the scrap or recyclable steel market. In 2007, the U.S. exported $10 billion dollars of scrapped steel

Worthington Industries (WOR), a U.S-base3d steel producer with more than $3 billion in annual sales, is a leveraged steel play on the automotive sector. Over 26% of Worthington’s steel sales are tied to automotive sector, with 15% of total sales coming from General Motors (GM), Ford (F) and Chrysler alone.

For more ideas, check out the Top Steel Stocks portfolio on Stockpickr.