TORONTO (CP) – The roaring steel market, fuelled by sales to China over the past year, is letting off some steam as global prices soften and demand drops.
“We’re on the knife’s edge here,” says Michael Locker, president of New York-based steel consultants Locker Associates. “A lot of people are becoming pessimistic and saying that prices are going to go in the dumper. Certainly they’ve been weaker, but they’re not terrible.”
The second quarter continues to show signs of weakness, Cousins added, and troubles in the automotive sector are putting a crimp in prices.
But the steel market is also adjusting to an overhang of inventory, which could mean the softening prices are only temporary.
Locker said customers “way overbought on the anticipation last year that prices were going to continue to zip up. Now they’re overloaded and they have to work down the inventory.”
Cousins noted that, although prices have fallen, they are still far above the $250 US a ton that hot rolled sheet garnered in mid-2003.