Steel Could Be the Next Victim

With the recent unsettling of global markets, some say there is an overlooked casualty looming: steel and related stocks.

The price of steel has been steadily rising throughout the year, as oversupply is being continuously met by voracious demand from emerging economies, which are using the metal to build everything from new microwaves and washing machines to cars and trucks.

But any slight shift in demand from emerging markets could potentially affect the price of the commodity, says Jepp Papp, who helps manage $650 million for Oberweis Asset Management's China funds. "I would say it's definitely a margin story right now. If the 10% growth in China cools off to 9% or 8%, you could see prices come back down again."

So far this year, steel manufacturers across the world have been raising prices to keep up with the demand from emerging markets. Tokyo Steel has raised its domestic steel price, while Baosteel, which supplies steel to China, quickly followed suit last week. China Steel, which supplies the metal to the Taiwanese market, is expected to raise prices by between 2% to 6% in April.

Last week, the price of 4A New Steel Bales, a type of recycled steel, jumped 13.4%, the largest move for the commodity in three years, according to Metal Bulletin. Meanwhile, U.S. steel production increased 1.8% to 2.017 million tons in the week ended March 12 -- the first time production has cleared the 2 million mark in over three months.