Hot metal market

The market driver is China, no question about it

The Seattle Times

Insatiable demand from China, along with the recovering U.S. economy, has boosted prices for raw industrial commodities across the board. As a result, several Pacific Northwest metals industries — steel making, aluminum smelting, hard-rock mining for silver, lead and zinc — have rebounded from their near-comatose state of just a few years ago.

But as other industries have learned, China can be a competitor as well as a customer. In recent months, China has begun exporting spare rebar to the United States, pushing down prices and prompting production cutbacks at producers such as the Nucor Seattle plant. In aluminum, China’s production capacity nearly tripled between 1995 and 2003, reshaping the global market.

Prices for many metals remain at or near historic highs, despite some recent slippage. But high prices alone can’t guarantee healthy metals industries, in the Northwest or anywhere else. Steel mills and aluminum smelters require lots of cheap electricity, and the Bush administration’s recent proposal to raise Bonneville Power Administration rates sent industry and government leaders scrambling to block it. And if U.S. industrial production falters, so will metals demand.

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