This is actually a pretty decent analysis (in overview) of what’s happened in the last year. It’s more from the perspective of a stock investor than a steel consumer, but useful none-the-less. And check out the links at the bottom of the article for other related articles.
The Motley Fool
Just as a steel shortage in the back half of 2004 triggered a price boom, increasing supplies have weighed prices back down. While world economic growth has been okay, it hasn’t been strong enough to absorb all the new supply flooding the market.
The markets indicate that metals’ latest cycle is finally coming to a head. Worldwide steel output has increased by over 8% through the first five months of the year, with Chinese output increasing over 27%. Even in the best of times, it’s tough for the market to absorb that much steel. Consequently, prices have softened
China is the focus of the current problem: They’re producing far more steel than anyone else. Although the Chinese government appears committed to the notion of slowing down economic expansion, the mills continue to churn out more steel, and China will likely be a net exporter this year.
Despite a surplus of steel, China has also found itself with a surplus of iron ore. China’s iron imports have actually managed to exceed steel production, appreciably raising inventory levels at its ports.
As a result, iron ore producers report that the Chinese are rescheduling shipments — trying to push them back and delay receipt. So while major iron ore producers managed to secure massive iron ore price hikes only a few months ago, they’re now forced to sit and wait for China to accept the ore they contracted to buy.