Most normal families talk about things like their kid's activities and sports teams at the dinner table. But in my house, the talk is often about commodity markets. Usually, metals, specifically, given my wife's primary focus on the area. Of late, steel markets have been of particular interest to a number of parties, especially given some of the challenges producers are facing (and as procurement organizations get smarter at dealing with volatility and producer pricing games). MetalMiner recently captured a number of the headlines around steel, suggesting the market conditions have changed dramatically in the past 12 months. Consider how "this time last year the market was looking shaky but producers were still getting near record prices and talking of higher prices for September/October ... [but] now mills are again going through a mini downturn as price rises that were pushed through in the second quarter came unstuck and are dropping off about 8% in September."
Part of the challenge is that global demand is rising slowly, despite the fact many economists believe we're gradually emerging from the recession. One European provider MetalMiner quotes suggests that "real demand is still slow and the rise in sales seen in the second quarter is largely going to fill very depleted inventories; it does not represent a real rise in end user demand". China production is "up" but much of this is due to government-led initiatives focused on internal stimulus (i.e., without the government, demand would have fallen through the roof).
Now remains a good time for steel buyers, especially considering capacity utilization rates remain <50% according to MetalMiner. Moreover, producers face an additional danger in that they might "bring capacity back on stream too fast and create a double dip in prices, a situation some fear may already be on the cards". Given the current situation, manufacturers forecasting some degree of stabilization -- and potentially tepid or better growth -- rather than decline, might very well consider long-term buying and hedging strategies to take advantage of the current situation. Especially given how other metals have performed of late -- despite a lack of true recovery signals based on material, non-stimulus demand -- the steel market represents one of the true bright spots for potential savings.