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Steel Industry Insight

Start to 2011

What a promising start to 2011!  Even though rapidly-rising steel prices have been met with a measure of restraint, and the robust levels of purchasing activity were largely based on inventory restocking, the situation did not necessarily inflate into a bubble as many predicted early in the year.  In fact, the market seemed to self-regulate conditions that were similar to what we saw in 2008.  Perhaps the steel industry really has learned its lesson, and our renewed sense of moderation will help us along the path to recovery, which seems to get smoother every day.

As always, scrap plays an integral part in both steel pricing trends and purchasing activity, and though some like to pick on scrap producers for being so erratic with monthly benchmarks (pricing predictions have been known to change on a dime), many don’t understand all the outside forces that hold significant influence over pricing decisions.  Nevertheless, tensions run deep along the steel supply chain.

While scrap pricing might not be the most reliable indicator of long-term market trends, we tend to use any tool at our disposal to gain some sort of insight on what the future will hold.  Looking long-term helps companies decide whether to invest, or hire, or explore emerging markets and regions that would otherwise seem prohibitive.  Several interviews in this issue offer a wide range of opinions on both the US and global steel markets, and where they might be headed in the latter part of this year.

However, short-term trending is useful as well—what the market might do next week could very well decide whether or not you make that deal tomorrow.  To help the steel industry make urgent decisions, we have added new pricing features to our website (www.steelorbis.com); Orbis Steel Index (OSI) and Reference Prices, benchmarking tools that have already garnered an overwhelmingly positive response from our subscribers.

Of course, every decision we make should include both long- and short-term considerations, and every step forward should include a quick glance back, so we don’t repeat the mistakes that made the economic crisis so devastating to the steel industry.  If 2010 was the year of cautious optimism, 2011 should be the year of careful confidence.  I wish everyone all the best in their endeavors.


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