In combination with a recovering global economy will be increased demand for steel. Why, then, are steel prices and exchange traded funds (ETFs) expected to see declines this month?
Steel production has been stepped-up big time. Mills in China, the biggest driver of global steel prices, and Eastern Europe are producing record amounts, says Robert Guy Mattthews for The Wall Street Journal. [Why Some Commodity ETFs Are Slipping.]
The timing for the increased production isn’t great. It comes amid signs that the world’s economies may not be on a strong upswing, prompting worries that supply will outpace demand and restrain prices just as they were beginning to rise. [Why Copper ETFs Are Swooning.]
The end result could be steel prices that fall at least 5% this month.
Production of steel is so strong that ArcelorMittal is weeding out its less-efficient operations, and shutting down less productive plants. Many insiders are watching local markets and making sure that output keeps in pace with demand. [Coal ETFs: Summer Demand Spike?]
For more stories about steel, visit our steel category.
- Market Vectors Steel (NYSEArca: SLX)
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.