Steel Price Fluctuations

'What goes up must come down'; it looks the steel prices are following this axiom. Steel prices were stagnating till 2003 and when they started rising again, there appeared to be no end. From April 2005, the prices started nose-diving and production cuts as well as loosing flab of inventory became regular features in the steel industry. Just when the steel manufacturers started enjoying favourable markets during the first half of 2006, the prices are again getting slashed. Behind such abnormal hike was the unsatisfied appetite of China for steel. It had gone on an importing spree and the global prices climbed to record highs as a result.
China is the biggest steel manufacturer and consumer at the same time. As per International Iron and Steel Institute (IISI), the world production during the first seven months of the year 2006 was 697 million tonnes - a growth of 10%. China's production was 235 million tonnes representing a growth of 22% where as India's production was 24 million tonnes and a growth of 10% - same growth as the world figure. China has now managed to overtake the steel exporting countries namely Japan, Russia and European Union in exports in the first six months. The excess production forced China to export steel which in turn weakened the global prices.
Obviously, the trump-card is with China and as a thumb-rule, if it imports - the steel prices go up and vice versa. Let us hope that China plays the trump-card soon. Some analysts have predicted that steel prices will go up within 4 to 8 weeks. The third biggest manufacturer in Europe - Corus has even announced its intention to raise prices from the next quarter. In India, the prices are likely to go up after the end of the monsoon season when demand generally goes up.
Meanwhile, the steel manufacturers are crossing their fingers for price rise.