Morgan Stanley recently downgraded Corus shares, because they alleged that the steel company had not hedged power prices. The steel industry has benefitted from rising steel prices over the last year, these price rises have often been on the back of a growing cost in the freight market and people of bought forward pushing the prices up. The freight market has been pushed up because there has been an increase in demand for coal and oil, and a lack of ships to cope with the increasing demand. The increase in coal and oil has pushed gas and power up and so at first look the steel industry with 80% of variable costs tied up in the electricity bill, has perhaps not benefitted as much as some would suggest. In reality the spread between power and steel prices last year widened in other words, steel prices rose faster than power prices. Morgan Stanley are pointing out that this spread is narrowing and Corus do not look to have locked in at the top of the market.