Goldman Sachs decided to take its downgrade stick to the steel sector this morning, sharply cutting its forecast for steel prices. The brokerage stated that steel buying on a worldwide basis has nearly stopped, but did hint that there could be buying opportunities ahead for some steel stocks. The firm's analyst cut his 2009 price estimate by 30%, noting that hot-rolled coil steel should average roughly $677 per ton for the year, and will likely bottom at $650 per ton early in the first quarter.

Perhaps this statement best sums up the situation: "The rug has been pulled out from under the steel sector." Despite the dropping prices, there are some buying opportunities, but timing the stocks could "be difficult, given the volatility in markets." In fact, Goldman noted, "Although we don't expect any near-term catalysts, valuation of some steel stocks is hard to ignore."

Accompanying this statement was a bevy of downgrades, one of which focused on Steel Dynamics (STLD: sentiment, chart, options) . The firm was cut to "neutral" from "buy" by the brokerage. STLD has dropped slightly more than 2% as we cruise through the midday hour. Watch for the 10 level to now act as resistance, as it failed to stop the stock's precipitous drop -- a 68% year-to-date loss.