Forecasts for Steel Markets

Readers Question: What is the future prespect for steel and palm oil in next 10 years to come?

If you take steel, it’s demand is closely linked to global economic growth. It is an important raw material for construction, car production e.t.c. Therefore, in a global downturn, demand will fall, prices will fall and firms will make less profit. These downturn is exacerbated by the global excess capacity which I think currently characterises the Steel industry. Thus, the recession could see firms closing and more mergers leading to a more concentrated global market.

However, the recession will not last for ever. After one year, we would expect to see renewed growth and therefore, increased demand for steel. Also the future of steel may depend on the extent to which new substitutes are developed. For example, it is not inconceivable a new plastic could be developed with similar properties to steel, but cheaper to produce.

I have less idea about palm oil. I think it is the second largest edible oil produced, having recently overtaken soybean oil. Also, palm oil has emerged as potential source of biofuels. Therefore, the demand and price of palm oil will depend upon how much the biofuels industry develops. Some see biofuels as an alternative to oil. Others see it as a damaging development responsible for higher food prices and damage to the environment.