29.3.04

THE ECONOMICS OF EXHAUSTIBLE RESOURCES. The steel shortage begins to pinch Chicago builders.
The increases are widely attributed to a construction boom in China that comes just as worldwide reserves of iron ore, a raw material for steel, are declining. [Steel consultant John] Anton said he expects steel prices to fall, perhaps suddenly, in the coming months but still remain higher than last year's levels.
Thus, in addition to the economic hysteresis inherent in restarting a mothballed blast furnace to meet a temporary increase in demand, add the problem that the mothballed blast furnace is more costly to operate with more costly feedstocks, and a steel shortage in the face of chronic excess capacity in the industry begins to make more sense.

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