The commodities market is a wild and unpredictable ride, with positive news stories causing prices to rise and negative ones causing them to plummet. Steel industry stocks are one of the most tumultuous and a pair of recent (and somewhat related) news stories seem primed to cause prices to fluctuate even further. Understanding these two stories can help you decide on whether or not you want to invest in the steel industry now or hold off for a later date.

China Steeling Large Portion of Steel Export Industry

China, already one of the largest exporters of steel in the world, recently increased its production even more. By focusing so many of its workers on producing steel, it has created more than it can handle. And as it begins exporting that steel around the world, it creates a bottoming out effect that impacts steel prices around the world. Excessive supply is the dangerous position when there is too much of a product to meet the demand.

Combine this effect with a decrease in U.S. steel imports, and there could be a problem with steel stock prices. Why? Because the more imports allowed into a country, the more that item's price will drop. For many steel companies, this is a major problem, because it will decrease the value of their goods and their company. However, limiting imports will, naturally, increase the value of their stocks. So if you've invested in steel companies in America, a successful decrease in imports could increase your earnings.

The US Pursues Anti-Dumping Probes

What China is currently doing with their steel can be defined as "dumping." This is an economic procedure that involves exporting a huge volume of a certain product to destroy its value in an importing nation. The product will be offered at incredibly low, and hard to resist, prices overseas while remaining at a higher rate at home. In this way, the dumping industry or nation can still make some profits at home while destroying their competition overseas.

The United States Commerce Department finally decided to attack by probing into several exporting countries (Australia, Brazil, South Korea, the Netherlands, Britain, Japan, and Turkey). These countries are, allegedly, dumping vast quantities of steel in the US market, often for discounts as huge as 16%. Beyond this probe, lies another complaint filed by six steelmakers targeting countries, like China and India.

These anti-dumping measures could negatively impact the exporting countries by forcing them into lengthy litigation that could force them to increase their prices, if they are found guilty of dumping. Importing countries will see a sharp rise in prices, but will actually benefit domestic production by allowing fairer prices to be charged. As a result, stock prices of already beleaguered steel companies could rise.

So what does all of this information leave you with? A lot of serious questions to consider. If you have invested in American steel production companies or are interested in starting, the first piece of news might scare you away or force you to sell. However, the second piece of news is much more positive. Pay attention to these stories before making an investment decision, but remember: buy low and sell high! Click here for more information on cold rolled steel.