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After a period of relatively good times for the metals industry, September 2008 saw the bottom fall out for all of the metals players. Major metal producers are struggling to adjust to rapidly descending demand, and the supply chain is working off significantly overstocked inventory. The markets have not responded to production curtailments and have not offset the decline in demand, resulting in rapid price erosion

After seeing steel prices and demand soar to unprecedented levels, demand came to a halt. This was further exasperated by the global economic melt down. In limited geographic areas where some level of demand existed, customers could not get letters of credit or other financial instruments to finance orders. This brought an exponential downward effect and saw steel prices at the end of 2008 lower than they were at the beginning of the year. As we come to the end of the Q1 2009, steel prices have not experienced any real growth. Many mills are running at 40 to 60 percent of capacity and do not appear to be ramping up production any time soon. With most automakers experiencing a significant drop in sales, most steelmakers around the world are awaiting the positive effects of government stimulus packages.

The aluminum industry has also been hit hard. After a number of years of industry consolidation, the industry had seen good times. However at the end of 2008, three-month LME price of unalloyed aluminum had declined nearly 40 percent from the start of 2008 and more than 50 percent from the midyear peak. Aluminum inventories are at the highest levels in over a decade. Some of the production facilities acquired in the last round of mergers and acquisitions have cash costs that exceed prices and have been shutdown.