The fortunes of the steel industry have long been tethered to the whims of global economic growth and demand. However, the industry, along with exchange traded funds that track steel producers, is beginning to show less reliance from the demand side as producers begin to better manage and adjust their production.

ETF analyst Robert Goldsborough at Morningstar points out that steel supply is playing a larger role in determining steel prices than it once did. Additionally, steel buyers and distributors are holding smaller inventories.

Consequently, short-term supply fluctuations are beginning to have a larger impact on market steel prices.

While global economic growth remains weak, Goldsborough does not believe the fundamentals will continue to deteriorate. Additionally, he notes that the negatives have been somewhat parred with lower iron ore and coal costs to help maintain comfortable margins within the overall steel industry. [Steel ETFs Pull Back on China]