China drives steel, non-ferrous demand

Purchasing’s Commodities Councilassess economic outlook for steel, zinc, aluminum, semiconductors and connectors

By Purchasing Staff -- Purchasing, 2/26/2008 1:11:00 PM

Expect weak economic growth, especially in the first half of the year. And keep an eye on scrap prices, inventories and capital spending for hints on pricing and when a recovery will come. 

That’s the consensus of the Purchasing Magazine Commodities Council. In a series of podcasts this month, Council members stopped short of saying that there would be a recession. But all agreed that the U. S. economy is taking several hits. And, those Council members who specialize in metals, say China is the starting point for all discussions on supply, demand and pricing. 

“Consumption in the U. S. and Europe is weak, and China is the driving source for non-ferrous metals,” says John Mothersole, non-ferrous metals analyst at Global Insight. “China is also the starting point on steel,” adds John Anton, Global Insight’s steel analyst. 

Timna Tanners, steel and construction materials analyst for UBS Securities, says that transportation and energy costs are driving all other costs higher. “There are no alternatives for buyers,” she says. “It will be hard to negotiate.” 

In the electronics arena, Ron Bishop, founder of the Bishop Report, says the big issue in the connector industry is getting manufacturing in sync with demand. And, Brian Matas, vice president of market research at IC Insights, predicts there will be no shortages in the semiconductor industry and that prices will firm in the second half. 

Click here to listen to all their views and their advice on what buyers should look for.