KOWLOON BAY, Hong Kong - April 30, 2016 - PRLog -- Without question, the past year and a half downturn in crude oil has been remarkable. With the commodity recently collapsing to 13-year lows under $30 a barrel, a wide swath of the US oil industry is sliding toward bankruptcy. Of course, the immense uncertainty is showing up in stock prices.
As a result, I recommend you steer clear of the entire small- and mid-cap exploration space. Instead, focus on the best of breed oil producers with strong balance sheets mentioned a few days ago. But oil isn't the only commodity industry suffering right now.
Steel companies are wrestling with one of the steepest industry downturns in decades. With prices languishing, some of the world's largest steel companies like US Steel and Arcelor Mittal are feeling the pain.
The gloomy situation in the global steel market has already wreaked havoc on the share prices of the two companies mentioned above. However, thanks to the selloff, both companies are trading squarely in the discount bin. In fact, Arcelor Mittal trades at an 81% discount to book value while US Steel trades at a 59% discount. What's more, both are trading at a mere 9% of sales.
Here is the real upshot. Industry analysts suspect steel prices will start stabilizing this year. This is because steel producers are taking big steps to cut overcapacity.
When producers finally start throwing in the towel and cut production, it is a sign the bottom is near. It is also a signal to start picking up best of breed commodity producers.
About Langford Nachman
Langford Nachman http://www.langford-nachman.com/ is an independent over-the-counter ("OTC") broking house specialising in commodity and futures trading, derivatives broking of oil, metals, agricultural products, currencies, freight and other commodity markets. Since its inception Langford Nachman has responded to clients' needs and expanded the product offering to include all grades of commodities and related derivatives products. The firm brokers its products on the basis of both master and bilateral contracts and is able to negotiate structured and term business as well as prompt cargoes. The firm has provided investors also with specialised alternative investment solutions both for individual investors and corporate services.
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