By Lynn Carpenter
Be careful what you read. Today I got a breathless missive from a
commodities watcher who is usually very sharp. But this time the
panicked message is that the price of steel has risen 51% in the past
month.
I am sure many others will pick that up and repeat it. But here=92s what
an investor ought to know.
It didn=92t happen. Not quite like that. The urgent news pertained to
=93bundles at $ per ton.=94 That would mean rebar or scrap metal prices.
The bulletin should have made the exact type of steel clear=85 we=92ll
come back to that.
Scrap steel prices have risen boisterously this year, but they did not
go up that much in the last month. Nor has steel in general. Below is
the Dow Jones U.S. steel index, which combines types. With a value of
426 a month ago, it clocks a 16% gain in the last month.
As for scrap steel, the Ohio Department of Trans****tation keeps tabs
on shredded scrap and #1 heavy melt. Those categories rose from $362
to $381 and from $338 to $355, respectively. That=92s 5% in a month.
Scrap, such as crushed auto bodies, was selling for $393 a ton at the
end of March. Today, quotes were for $420 a ton from two sellers,
about what most of the industry commentary is claiming. That=92s a
bigger rise than Ohio DOT suffered, but still barely a 7% increase in
the past month.
You could however find that steel jumped from less than $400 a month
ago, to over $500 now, if you compare different categories=97scrap to
hot or cold rolled steel, for instance.
The mini-furor in steel news seems to have begun in a serious source.
Analyst Eric Prouty at Canaccord Adams wrote a research note saying
that scrap prices were going up rapidly because supplies were low.
Prouty said he expected scrap steel to rise from $100 to $150 a ton in
the next year. "For perspective, shredded auto scrap is now selling
for about $400 per ton and should likely increase to well over $500-
plus per ton in the near future," Prouty predicted in his April 3
note.
That=92s 25% to 37% in a year, not 51% in a month.
For complete article by Guru Lyn Carpenter visit
http://www.ezycash.tk/
|
