Even Toyota could not pump US auto sale! All three big US auto makers are cutting back production dramatically. They didn't expect the market goes so bad so quickly. They will cancel orders, with ore price skyrocketing, demand shrinking, US steel maker are the next to the toilet.
I just went long a base metal miner. Steel companies have shown an excellent ability to pass on the rising cost of raw materials to their customers. Steel demand remains strong even in this enviornment of restrictive credit.
You have to understand how far you can pass costs onto the consumers, that can only last so long before the consumer tires out. A friend of mine who in the last month alone has seen his shipping costs rise to rates that even he cannot comprehend. He told me one of his delivery charges is up 200% from where it used to be, other places that werent charging for shipping have now even passed this on to the customer. You can only pass so much on to the consumer. X will see demand fall and stock price will fall as well.
I share the same concerns, largely because of rapidly expanding production capacity in the steel industry. This is the reason I didn't invest directly into a steel maker, but looked for an investment that would benefit from increased steel production. I still see strong demand in the near future however, as government issued debt from the BRIC share increased ratings and more money seems to be spend on infrastructure by those governments. I think that increased steel prices will be the downfall of US carmakers and alot of construction contracters and not vice versa.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aylHCAjqeGKo&refer=home ArcelorMittal Second-Quarter Profit Doubles on Higher Demand July 30 (Bloomberg) -- ArcelorMittal, the world's biggest steelmaker, said second-quarter profit more than doubled after the company increased prices on higher demand.