From the Detroit News 2/23/2004: Steel prices soar 66% in a world market 'gone mad’
In my regular job, I work in the masonry/building supply industry. Late last summer, I started noticing the price of steel rising. I didn’t pay it much thought - it’s a commodity where price fluctuations are expected. By late November 2003, prices continued to crescendo, with shortage & increased price forecasts covered widely in many financial publications.
It’s now March and I’ve yet to hear a word about price relief anytime soon (i.e. 2004). Current market costs on steel reinforcing mesh have soared 40% since January and rebar is up even more. In fact, nail suppliers are predicting outages within the next 8 months. From everything I’ve seen and heard, here just doesn’t seem to be price relief in our immediate future.
As many of my suppliers have been telling me, the steel shortage (and the fact it was difficult to get cargo ships to bring bulk rock salt up from South America this winter) is a result of huge demand in China (where there’s a huge dam / canal system being built) and the rest of Southeast Asia (where construction is booming). You know the story; as the demand rises, so do prices – until supplies can be increased.
Now I don’t want to get in a debate over free-trade, or the pros and cons of Bush’s recent decision to lift steel trade barriers.
I’d also rather not hear about the evils of capitalism, that’s what the GD forum is for.
I have to concede the fact my knowledge of the futures market and the COMEX could easily be transcribed on the back of a business card. The one thing I do hear a lot is even though there’s a 50/50 chance prices will go up or down, the odds of making the right trade at the right time are significantly higher. I’ve also heard putting money in the commodity exchange is more akin to gambling as opposed to investing. What I’d like to know is this, in your humble opinion:[ul]
[li]With all these steel shortage forecasts, is it too late to throw a few bucks into the futures market or would it be like jumping on an overcrowded bandwagon?[]Do you expect to see a continual increase in stock prices on steel companies and other corporations that use steel (i.e. the auto, machine and construction industries) or do you think their profits will be pinched in these low inflationary times?[]Has anyone been watching stock prices on international shipping companies? If all the slow boats are going to China their rates are bound to go up.Without bragging, have you made any $ in the commodity market on steel futures?[/ul][/li]
Thanks