Ferrous

When central planners on the other side of the world play a role in commodity pricing, volatility can occur with the release of a single government memo.

Wall Street traders, reportedly worried about a potential slowdown in the Chinese construction boom and its accompanying steel demand, began selling off stocks in steelmaking companies in mid-October.

In October, steel stocks began dropping rapidly after Bradford Research, New York, downgraded Nucor Inc., Charlotte, N.C., and Steel Dynamics Inc., Fort Wayne, Ind. The accompanying report predicted weaker prices and softer orders for the steel industry.

Nucor shares lost $4.49, nearly 5 percent of their value, on the day the report was issued, while shares in Steel Dynamics fell nearly $3.00 in value, losing 7.5 percent of their worth.

Analyst Charles Bradford told CBS Marketwatch that high ferrous scrap prices would also affect the profitability of the two companies. "We are reducing our rating on Nucor shares due to increased spot steel price weakness and a sharp rebound in the price of steel scrap, the company’s largest [single] cost," he said.

Figures released by the Chinese government in October point to a slowdown of economic growth there.

Investors and fund managers took at least a short-term position on drops in profits for metals companies, overseas freight companies and other publicly traded firms that have mostly benefited from the China boom.