Several avant-garde economic thinkers have postulated that the combined effects of globalization, consolidation and the unprecedented 10 years of 10-percent growth in China have served to repeal the traditional cyclicality that has always characterized the steel business. Certainly, at the very least, the old four-year cycles have, in the current case, stretched to seven or eight years.

For those of us with long memories, however, there are signs that we are approaching—or have reached—the peak of the cycle. Steelmakers' common stocks are trading at multiples that are reminiscent of technology stocks before their collapse in 2000. Steel companies are changing hands at prices that cannot be justified by traditional valuation techniques. The sight of Russia's OAO Severstal and India's Essar Steel Holdings Ltd. bidding against each other to acquire money-losing Wheeling-Pittsburgh Steel Corp. is certainly a...