There’s no question about it: The steel industry has struggled during the past year.

Global steel demand grew by only 3.1 percent in 2013, as Chinese growth slowed thanks to the country’s economic reset and the lingering European recession. Steel demand has fallen to its most sluggish levels in nearly a decade. By contrast, between 2003 and 2007, global steel output grew by more than 6 percent annually, largely because of China’s massive infrastructure build out program.

Now, steel makers are positioned to return to faster growth. Below, we pinpoint the steel stock with the most mettle.

This year is expected to mark a turning point for the global steel industry, as production grows by 3.6 percent on the strength of recovering demand in Europe. That said, China is likely to play a much smaller role in both demand and production.

Over the past decade, the Asian powerhouse has more than tripled its share of global steel output to 46 percent. This year, the country’s production is expected to grow by just 4 percent as compared to 6 percent in 2013, as the country’s consumption falls below the global average for the first time in nearly seven years.

Given these weak Asian dynamics, most of the recovery in global steel demand will come from Europe.

Real steel consumption on the continent has been falling for nearly three years, declining by more than 2 percent in 2013 alone as demand from construction firms and auto manufacturers softened. In fact, automotive steel demand has been contracting for five years.

But Europe’s automotive sector is forecast to grow by about 2 percent in 2014 and the region’s easing debt crisis should loosen up bank lending in the region, kick starting the construction industry. Steel demand for construction and infrastructure projects in Europe is on track to grow by at least 3.5 percent this year alone.

Demand in India is also expected to post at least a modest recovery this year, following a proposal by the nation’s Finance Minister to cut the excise tax on automobiles and capital goods such as heavy equipment and turbines. While the tax cut isn’t a done deal yet, it is widely expected to pass and is forecast to help boost Indian steel demand growth by as much as 6 percent in 2014.

In the Americas, US steel demand is projected to rise by 3 percent, due to slow though steady economic growth, while South American demand is on track to jump by as much as 5 percent thanks to infrastructure projects and energy sector development.

Demand growth won’t exert a material impact on weak steel prices because of underutilized capacity and oversupply, but it’s expected to boost sales volumes. At the same time, new production will be relatively inexpensive because of extremely low iron ore and coking coal prices, which will raise steel producers’ margins.

How to Play It

Given that most of the growth in steel demand is coming from the developed market, particularly Europe, it makes the most sense to look for producers close to the demand.

ArcelorMittal (NYSE: MT) is the world’s largest steelmaker, with substantial exposure to the developed world. More than 40 percent of its revenue is generated in Europe, 40 percent in North America and the remainder from the rest of the world. In all, the company is responsible for more than 5 percent of global output and its productions are used in the construction and automotive industries as well as durable consumer goods and packaging.

The company also is vertically integrated, as it mines iron ore and coal to meet most of its own demand. Those mining operations sell about 40 percent of their production to the parent company, feeding more than 60 percent of the steelmaking operations’ demand.

While the steelmaker weathered the global financial relatively well, staying in the black throughout those years, the European recession took a heavy toll. ArcelorMittal posted an annual loss of $3.8 billion in 2012 as weak prices for iron ore, coal and finished steel all plunged.

That prompted the company to undergo a massive cost savings program, yielding more than $1 billion in cost improvements last year with the goal of another $1 billion in savings for this year and next.

The company concentrated its slab production operations to just five costal sites and idled less competitive lines, including four Western European blast furnaces, one hot still mill and two cold rolling mills. The company has also been paying down its debt load, taking it from $24.9 billion in 2011 to $16.1 billion today.

Thanks to those cost cutting and restructuring efforts as well as some demand recovery in the fourth quarter, ArcelorMittal reported a narrower loss of $0.69 in earnings per share (EPS) in the quarter versus a loss of $2.47 in the year-ago period. Losses also narrowed for the full year, down from $2.17 in 2012 to a loss of $1.46 in 2013, despite the fact that revenue declined from $84.2 billion to $79.4 billion.

The company also made substantial investments in its steel making operations after focusing on the mining side of its business for the past two years, building new steel units in Brazil and Argentina. It also entered into a Chinese joint venture and added to its Canadian Dofasco operation.

ArcelorMittal purchased a finishing mill in Alabama from its largest competitior, ThyssenKrupp (OTC: TYEKF), in partnership with two Japanese steelmakers.

Thanks to those machinations, the company narrowed its European operating loss per metric ton of steel from $500 in the fourth quarter of 2012 to just $75 in the same period in 2013, though the European operations were actually cash flow positive.

With the company’s loss narrowing because of cost saving measures even as demand is recovering, the company should return to the black by the second quarter.

As a global leader with improving prospects, ArcelorMittal is a solid play on the recovering steel market up to 20.