Do u think steel, silver prices will rise now?

Question

What about oil?

Just curious

Answer 1

I think steel and silver prices will decline over the next 12 months due to the following reasons:

1. Marginal steel production is dominated by the Chinese, whereas the rest of the world is growing at about 1% per annum. The Chinese have been growing capacity growth at about 20% per year, driven largely by the lower-middle quality hot rolled, cold rolled, beam, billet and other commodity open heart smelted steel. Total global supply is growing at about 4%. Meanwhile, steel demand is growing at about 4% and edging downward - leading to a slight oversupply in 2007 and into 2008 due to easing of Chinese and Indian industrial growth from white hot to red hot. That is, the undersupply situation should ease as marginal demand falls below marginal supply.

2. Silver prices should decline as precious metals tend to be a hedge against inflation. The effects of tightening monetary policy around the world should have a dampening effect on inflations, which has already been seen in the recent sell offs of hard commodities. This should be partially dampened by the weakening of the US dollar, whereupon the rest of the world buys more hard commodities due to the relatively "cheaper" US-dollar denominated hard commodities. Net-net, I am projecting that silver prices drop over the year.

3. Oil prices should rebound over the near term, mostly due to the December 14th meeting of OPEC, whereupon I am expecting a 1.0-1.5m bpd cut in production. This should help OPEC defend its US$58-64 band that it is informally comfortable with. Also, the recent dip below the band is largely due to warmer-than-normal weather in the US. If there is mean reversion on weather patterns, oil should rebound above US$60/bbl.

Answer 2

silver will.

Don't know about steel.

Answer 3

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