Steel: The Top Is In Parts II, III

| About: ArcelorMittal (MT)

LONDON: The steel magnate Lakshmi Mittal joined the board of Goldman Sachs (NYSE:GS) as an independent director, the company [Mittal Steel (NYSE:MT)] announced Sunday, underlining the growing mutual dependence of the developing world and Wall Street's titans.

The very same Lakshmi Mittal who last week announced that, in so many words, steel prices have reached what looks like a permanently high plateau (© Irving Fisher Sep. 1929).


Mittal joins Goldman Sachs board
by Julia Werdigier
International Herald Tribune Jun. 29 2008

Lakshmi N. Mittal to Join Goldman Sachs Board
Press release Jun. 29 2008

High prices curing high prices

NakedShorts usually takes his prognosticators with more salt than the Dead Sea, but when the guys who called the steel move pretty much all the way from the bottom issue a de facto sell on their biggest customers? It may pay to pay heed.

As a growing number of steel buyers and others forecast a leveling out in flat rolled steel prices during the coming months, two industry analysts gave a stronger message last week: Spot prices on sheet are poised to “plummet” in the second half of 2008.

Peter Marcus and Karlis Kirsis, managing partners in World Steel Dynamics [WSD], see the odds as essentially even that the export market price for hot rolled coil will fall to a range of $675-750 per tonne fob from about $1,100 per tonne currently...

...Marcus acknowledged that most of WSD’s own sources do not expect prices to decline as much as he and Kirsis anticipate. But...they gave a number of reasons for their outlook.

These include a sharp rise in global steel output as high prices have both encouraged mills to boost output and have coaxed more obsolete scrap out of the reservoir, resulting in a 12% rise in worldwide steel production this year to 1.5 billion tonnes. Moreover, an approximate doubling of steel product prices in several markets have helped to dampen demand in certain highly steel-intensive sectors...since their producers find it virtually impossible to pass along soaring costs to end-users. [Emphasis added].

Possibly early. But probably not wrong. And just as Australian iron ore producers whacked the Chinese with a near-doubling in iron ore prices.

WSD expects flat rolled coil price plunge
by Frank Haflich
Metal Bulletin Jun. 30 2008
(not directly linkable)

World Steel Dynamics

Earlier on NakedShorts:

Steel: The Top is In 
Jun. 29 2008