The David J. Joseph CompanyCincinnati, OH, United States

Construction Decline Persists - The value of US construction put in place, an indicator of steel demand, dropped 6 percent in May 2008 compared to a year earlier. The US housing sector continues to suffer from the collapse of the subprime mortgage market: residential construction was down nearly 30 percent in May 2008 compared to May 2007. Nonresidential construction decreased almost 12 percent during the same period.

Steel Market Robust Despite Challenges - The US steel industry is experiencing increased sales and profits even though raw material prices remain high, and as some key markets, such as the auto and construction sectors, are experiencing significant slowdowns. The industry is buoyed in part by a weak US dollar that helps reduce steel imports. A weak dollar also makes finished goods containing steel cheaper for foreign customers. Steel sales are being helped by strong foreign demand in the industrial machinery and specialized manufacturing sectors. US steel manufacturers are also seeing less competition from Chinese steel.

Steel Prices Not Yet Peaked - High steel prices may not have yet reached their peak, according to Barclays Capital. Rapid infrastructure development in China and India and tightness in the markets for scrap and raw materials, such as iron ore and coal, are expected to keep prices high. US producer prices for iron ore increased 12.6 percent in May 2008 compared to a year earlier; coal prices rose 11.7 percent.