Big Steel is Back

The steel industry has rebounded from its two-year slump, and the upturn is likely to continue through the next year, according to a report in the Oct. 18 issue of BusinessWeek.

Prices are the strongest in two years, and according to BusinessWeek, prices for some types of steel have tripled in the last 12 months.

But the boom is putting the squeeze on steel consumers like the auto and construction sectors, and there’s not likely to be a drop anytime soon, the report says.

BusinessWeek says American steelmakers owe much of the turnaround to China’s surging demand for steel, which is forecast to increase by 17 percent this year to 280 million metric tons.

Mary O’Connor, analyst at Locker Associates Inc., tells BusinessWeek that Chinese demand will continue to be strong at least though the 2008 Beijing Olympics.

Prices and demand are likely to remain high because steelmakers are exercising caution to keep them that way, BusinessWeek says. So far, most U.S. players in the steel industry are improving their current facilities to boost capacity¾not making large capital investments in building new facilities.