Today’s Wall Street Journal reports that the world’s largest steel companies are worried about overproduction.
Many of the world’s steelmakers are expressing growing concern about global oversupply and increasing exports from China, the world’s largest steel producer and consumer, and warning Chinese producers to rein in their production.
This follows on the heels of last week’s concerns that inventories are piling up. (See post on that topic.)
Keep repeating after me: when commodity prices rise, production increases, and eventually prices come back down.
Business Strategy Implications: Steel-using businesses should purchase spot and look forward to declining prices. Steel producing companies should avoid further expansion at this time. Other companies involved in commodities should look for a similar phenomena in their industries.