This past July investors and persons in the metal space foresaw a rebound in steel. U.S. Steel Stock (the primary tracker for steel prices on the index) has a jump to over twenty-five dollars in July of 2016. Hopes were ruined as the stock now sits under twenty dollars in October. So what can rejuvenate a spike in steel prices and other metals?
For one thing, the low rate of inflation has not helped. Our economy is waiting for an industrial boom to be born again. No need for industry means no need for metal. So prices have dropped because of the decline in production these past few months.
A second factor that is weighing on steel and other metals is the unsureness when it comes to interest rates and the rate of inflation. Normally, when inflation is higher than interest rates, metals are attractive for investors. Currently, the inflation rate and interest rates are so low that no one foresees metals as a measure for long-term growth.
People in the recycling and precious metal sectors are begging on their hands and knees for an uptrend. The small guys are running out of business because of the low demand and heavy supply. The surplus for steel and other metals is getting out of hand. Just like oil. Something needs to happen before the industry hits another fault line.
