Steel Glut

Recently, sponge iron manufacturers were on the war-path and were demanding that import duty on scrap should be increased otherwise they will be forced to close shop. (Sponge iron and scrap are both substitutes for steelmaking).

This highlights an important aspect that no industry works/operates in isolation. Recession in one industry can affect profitability of other related industries. Investors in the capital market must watch these developments and should avoid studying an industry in isolation. Rather they should take a holistic view.