Monday June 2, 6:28 pm ET
Jesse Emspak
It returned 14.85%, the third best for the month among ETFs tracked by Lipper.
As of May 29, two-thirds of the fund is in basic materials while the remainder is in energy stocks.
One of the top holdings in Metals and Mining is United States Steel (NYSE:X - News). It made up 5.05%, as of May 29. The stock was up 12.19% in May and has had a run-up of 42.84% through Friday. It has an IBD Composite Rating of 92.
High commodities prices continue to drive prices for metals.
The price of hot rolled steel sheet went to $1,020 a ton in May from $850 in April. Hot rolled steel sheet is the benchmark product for cars and appliances.
Steel companies, such as Corus, part of Tata Steel, have announced price hikes, and iron ore producers, such as Brazil's Companhia Vale do Rio Doce (NYSE:RIO - News) and Rio Tinto (NYSE:RTP - News), are pushing up their prices as well.
Competitive Advantage
U.S. Steel has ended up in a strong position against foreign steel makers because the weak dollar makes foreign producers' steel more expensive.
The stock is slightly off its high of 185 reached May 21, but there is no sign steel demand will slow down.
Other big steel plays are Nucor (NYSE:NUE - News) and AK Steel Holding (NYSE:AKS - News).
The stocks make up 3.58% and 4.52% of the assets, respectively. Nucor has an IBD Composite Rating of 92 while AK Steel is at 94.
Nucor was down 0.9% in May, closing at 74.80 on Friday. The stock is off its high of 83.56 reached on May 19, but returned 26.3% year to date.
AK Steel started the month at about 63, topped out at about 73 and dropped to a May low of 64.76 on May 23. But it has since recovered and closed at 71 on Friday.
Rising Coal
Arch Coal (NYSE:ACI - News) is another large holding at 5.20%. Demand for energy has pushed up coal prices, and the stock rose 13.16% in May. It has an IBD Composite Rating of 97.
Coal futures rose above $100 per ton in May. Many countries that would once have been exporters, such as China, are now importers.
Energy isn't the only driver of coal demand. The price of coal used in metallurgy is also up as those companies try to boost production.
Other big coal plays in the fund are Peabody Energy (NYSE:BTU - News) and Consol Energy (NYSE:CNX - News).
Peabody had some of the biggest gains of the fund's top holdings. It started May at 61.13 and ended the month at 73.92, a 20.9% jump, despite being off its high of 81.10.
The stock is 5.18% of the fund and has an IBD Composite Rating of 92.
Consol had a similar story, picking up 20.50% over the same period. The stock has an IBD Composite Rating of 85. It makes up 5.03% of the ETF.
