The economics of steel? Pretty bad

In markets, a "buffalo jump" is the moment the price of a commodity rises suddenly before slumping back to its more normal steady state - which for products such as steel has been down, down, down.

It's based on the tradition of Native Americans to herd buffalo towards steep cliffs and their ultimate death.

The price of a tonne of steel is of vital importance: too low and thousands of jobs are put at risk, as they are today for steel workers from Port Talbot to Rotherham, Corby to Shotton.

Global oversupply and declining demand have seen prices slump by more than half in the last year.

Of all the steel produced in the world, only two-thirds is actually being used, a low "utilisation" rate.

But the price of steel has actually been rising in the last few weeks, creeping up to about £285 per tonne, a rise of £30, according to Platts, the commodities pricing agency.

Is this the dawn of some sunnier weather in commodities, including steel, that have been trapped in a bearish cycle - and possibly better news for the British steel industry? Or just some brief sunshine ahead of further stormy showers?

In other words, a "buffalo jump". The fundamentals are looking poor for steel. This is in a note from the Barclays' commodities analyst, Kevin Norrish, who used the dreaded "jump" term to describe the recent price rise.

"Investors have been attracted to commodities as one of the best-performing assets so far in 2016," Norrish said last week.

"However, in the absence of any concerted fundamental improvements, those returns are unlikely to be repeated in the second quarter, making commodities vulnerable to a wave of investor liquidation."

In other words, investors have bought in to make a killing in markets that collapsed in the first three months of the year.

And they could get out again just as quickly.

As Norrish suggests, the fundamentals are working against any prolonged increase in the price of steel.

The biggest reason is China, which produces half the world's steel. The rise of that country as a steel-exporting country is remarkable.

In 2003, China exported 7.2 million tonnes of steel - about 5 percent of the world's trade in the commodity - mainly to other Asian markets.

The writer is the economics editor of BBC News.