Global Economy Rolls on Wheels of Steel

Two stories that show you just how hot the steel market is...

China's steel sector just keeps growing

China's iron and steel industry could be regarded as a barometer of the country's economy, which is still mainly propelled by fixed-asset investment and export-oriented manufacturing that consume a lot of raw materials. Hence strong economic growth boosts demand of steel products.

Therefore it is little no wonder that steel production continues to climb even though the industry has been a major target of the government's two-year-old belt-tightening policy. This strongly suggests that if Beijing cannot rein in the galloping economy, it can hardly cool down the steel industry alone.

Stainless steel cycle has turned, says Merafe

Merafe Resources, which together with its partner Xstrata is one of the world's largest ferrochrome producers, expects prices to continue to rise as stainless steel enters a bull market.

"The second quarter of the year has seen a turnaround for the ferrochrome business. Stainless production has increased sharply, as service centres and fabricators returned to the market to replenish inventories and meet growing demand, particularly in Europe," says Merafe in its results commentary.

Okay, here's my question. If steel is so hot, what are the chances that the global economy is slowing down? I'd say slim to none ... at least not yet. You know that 11.3% GDP growth China saw in its most recent quarter? What if it TOPS that in its next quarter?

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