My wife has been hard to find time with of late. I feel like I need to schedule time with her people. No, our marriage is not on the rocks. Anything but, I hope! She and her business partner have been working double-time on their 2009 metals price predictions, burning the midnight Excel oil and combing the political, economic and world headlines and trends to forecast the market. While they're in the process of publishing many of their price predictions for lead, aluminum and other metals over on their blog, I thought I'd provide some information on one of their first predictions, steel, because it is such a harbinger of the world economy. Over on Metal Miner, Lisa and Stuart write in Part 1 of their steel price predictions that "Perhaps no metal had as dramatic a ride as steel during 2008 … [but] what will the market bring in 2009?"
To answer this question, we need to take a step back. Since speculation plays a "smaller role in price setting within the steel market" compared with other metals we can rely on "good old fundamentals such as supply and demand" to gauge where things are headed. But let's not forget that the producers can artificially manipulate things to their blast furnaces content and they're in the process of "doing whatever they can to create a steel shortage … pulling capacity offline in an effort to better match supply with demand." Lisa and Stuart examine this driver and many more assumptions going into their price forecast model in Part 1 of their series, but Part 2 is where they get into even more detail, ultimately suggesting that "we're going to call [the steel market] flat to slightly lower for the first six months of the year. [But] prices could inch up by 15-20% during the second half of the year, as a cocktail of producer cutbacks begin to restrict supply again, the inevitable flood gates of anti dumping cases start, and the new administration's protectionist policies begin to put a damper on cheaper imports."
So there you have it. I have not done their posts justice in this short synopsis, as they get into far more detail than most non steel-buyers, financial analysts or traders would care to consider in the actual posts. In the coming weeks, I'll link and provide some commentary around their price predictions for other metals as well.
- Jason Busch