Keep an eye on steel and iron ore prices
Those hoping for a swift rebound should keep an eye on the steel market.
Steel is used for everything from cars to energy equipment. American steel firms are gloomy, says Bob Tita in The Wall Street Journal. Mills are operating at 56% capacity because of a sharp drop in demand. The price of a “hot-rolled coiled sheet of steel” is now 50% off a July 2018 high. The oil price crash means little demand for new drilling rigs, while the idled auto industry has cost the steel sector $1bn in lost sales.
Producers of iron ore, the main ingredient used in steel, are more optimistic, says Neil Hume in the Financial Times. Chinese steel production remained resilient during its coronavirus lockdown, allowing iron ore prices to stay above $80 a tonne despite the wider commodity price slump. Miners BHP and Rio Tinto seem confident that China’s recovery will fuel renewed demand for raw materials. The country is the world’s top consumer of the “rust-coloured rock”, using it to churn out roughly one billion tonnes of steel last year.
Steady Chinese steel production was not driven by market forces but by government support, says Kieran Clancy of Capital Economics. Local steel stockpiles have “ballooned” and the industry will eventually have to bow to the inevitable and follow the rest of the world in cutting output. That will weigh on iron ore prices, which we think will fall to $60 a tonne by the end of June.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Alex Rankine is Moneyweek's markets editor
-
How to invest in nuclear power
We need nuclear power to go green, says Dominic Frisby. But there is a better option than huge power stations
By Dominic Frisby Published
-
Chase slashes its easy-access savings rate – is it time to switch?
The Chase easy-access savings account has proved popular with savers thanks to its competitive rate and bonus deals. But, as the rate has dropped, has it lost its charm?
By Katie Williams Published
-
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
By Kalpana Fitzpatrick Published
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
By Marc Shoffman Published
-
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
By Ruth Emery Published
-
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
By Marc Shoffman Published
-
Best investing apps
We round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
By Ruth Emery Last updated
-
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
By Andrew Van Sickle Published
-
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
By Ruth Emery Published
-
UK recession: How to protect your portfolio
As the UK recession is confirmed, we look at ways to protect your wealth.
By Henry Sandercock Last updated