Leaping off a cliff might sound like fun to the adventurous, hang-gliding type, but for businesses trying to stay airborne in the current economic environment the feeling is more akin to losing an engine in mid-flight.

For metal players trying to avoid a financial crash and burn, the only option is to land with minimal damage—not an easy feat as low industry demand stiffens competition among suppliers fighting for the few orders available.

The tool steel products market, for one, "has fallen off a cliff," according to Dave Murray, senior vice president of Latrobe Specialty Steel...