If the most popular question received by us at MetalMiner is “where will the [steel] price go,” the second most popular question, “have we hit bottom yet,” ranks a close second. And after the complete metals crash of October 2008, we find ourselves in the rather awkward position of saying, “no, we probably haven’t hit bottom.” The question to now ask ourselves is – why? On the one hand, and for reasons we have previously explained, our own steel cost build-up model does not suggest that steel prices have hit bottom. You can read those posts here and here.
Yet I was reminded again of another reason why we don’t believe steel has hit bottom yet. Earlier this morning I had taken a look at the CRU spi Global Steel Prices Index (not for fun mind you but for a question someone had asked) to check out which weeks within the months of October and November steel pricing had declined. It got me thinking about an old blog post we did ages ago back in February entitled: Metal Price Predictions Throw Them Out the Window. I was reminded that reviewing historical pricing can also provide some insight as to where prices will likely go. And so that’s when I took a second look at the CRU spi global index. The index today reads 182.95. So I ran a quick excel calculation and guess what? The historical average at least starting from June of 2000 and reported weekly was 134.73.
Yes, steel can come down further.