Steel Could Be the Next Victim

Falling steel prices would benefit big buyers of the metal, including automakers Ford Motor Company (F), General Motors (GM), Daimler Chrysler (DCX) and Toyota Motors (TM).

Meanwhile, Nomura's Darby recommends buying a basket of Asian shipbuilding stocks, such as Mitsui (MITSY), which "represent a low-risk proxy for underlying commodity demand in China and India." In addition, they give a low-risk exposure to commodities and to the divergence of the growth between China and India and the rest of the world.

What has kept the price of steel so high, adds Papp, is that steelmakers have been so cautious in how much they are supplying to emerging markets such as China. But if past cycles are anything to go by, this situation could reverse.

"In past cycles, steelmakers have ramped the supply as demand has decreased, and you've got massive price declines," he says.

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