Steel prices are set to rise 25% in 2008, according to major market analysts. I think it could climb even higher. Industrial growth in emerging markets is fueling global demand. That’s nothing new.
What is new is a steel futures market on both the NYMEX and the London Metals Exchange (LME). These are set to launch early next year, and major companies are already jockeying for position and applying to be come a major supplier for the LME.
Richard Schaeffer, chairman of NYMEX Holdings, told the press at a London briefing in early December that steel would become the biggest metal product traded globally. This new market would essentially have its finger on the pulse of the world’s construction. One industrial analyst at Platts says that the rebar and billet manufacturing markets are estimated in the tens of trillions of dollars.
This new market will give investors a whole new way of playing construction. If you like playing futures, expect the NYMEX and LME launches to be very liquid from the start. But if you take a more conservative approach to investing, look for companies that take a large position early in the game.
They are the ones that could possibly have an edge over their competitors when it comes to cost expenditures.
Either way, the steel market will give investors ironclad gains.
S.R. Nunnally
Editor, Taipan Trader
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