A poll published in Steel Business Briefing shows that 50 percent of the publication’s readers, mostly steel industry insiders, believe steel prices will drop 25-50 percent in 2009-2010. Almost 90 percent expect a drop of more than 10 percent. Meantime, other metals are also plummeting in price right now, especially copper and nickel. (Good thing I already sold my leftover pipes!)
Metal prices are always volatile, but with so many big Range mining projects dependent on high prices for steel and nonferrous minerals this is something to watch closely.
As the world economy slows, demand will not be as high for construction and raw materials, and ultimately steel. 2008 has been the most insane year in just about all commodity prices. Take a look at the stock price graphs for companies in the steel industry like US Steel (X) and Cleveland Cliffs (CLF) and in the energy industry like Exxon Mobil (XOM) and Chesapeke Energy (CHK). The spike we saw was incredibly irrational and not based on any real economic event. The drop we’re seeing now is just a correction of that. I think we’ve got a ways to go down yet before the drop becomes irrational.