New York (CNN Business)--A bubble could be brewing in steel stocks.

The pandemic brought the American steel industry to its knees last spring, forcing manufacturers to shut down production as they struggled to survive the imploding economy. But as the recovery got underway, mills were slow to resume production, and that created a massive steel shortage. This leads to the continuously rising prices of all steel products. such as Excavator and Bulldozer spare parts.

Now, the reopening of the economy is driving a steel boom so strong that some are convinced it will end in tears.

"This is going to be short-lived. It's very appropriate to call this a bubble," Bank of America analyst Timna Tanners told CNN Business, using the "b-word" that equity analysts from major banks typically avoid.

After bottoming out around $460 last year, US benchmark hot-rolled coil steel prices are now sitting at around $1,500 a ton, a record high that is nearly triple the 20-year average.

Steel stocks are on fire. US Steel (X), which crashed to a record low last March amid bankruptcy fears, has skyrocketed 200% in just 12 months. Nucor (NUE) has spiked 76% this year alone.

While "scarcity and panic" are lifting steel prices and stocks today, Tanners predicted a painful reversal as supply catches up with what she described as unimpressive demand.

"We expect this will correct — and often when it corrects, it over-corrects," said Tanners, a two-decade veteran of the metals industry who authored a report last week headlined "Steel stocks in a bubble."

Steel shortage is lifting stocks

Leading steel stocks have rallied five times more than the S&P 500 since the beginning of the year.

'A bit frothy'

Phil Gibbs, director of metals equity research at KeyBanc Capital Markets, agreed that steel prices are at unsustainable levels.

"This would be like $170-a-barrel oil. At some point, people will say, 'F this, I'm not going to drive, I will take the bus,'" Gibbs told CNN Business. "The correction will be very intense. It's just a matter of when and how it happens."

Gibbs said he is "more confident the steel price is in a bubble," rather than that steel stocks themselves are in a bubble.

The steel bubble buzz is just the latest debate about the sustainability of booming pockets of the market in this era of rock-bottom interest rates. Bitcoin, ethereum, dogecoin and other cryptocurrencies are on fire. GameStop (GME), AMC (AMC) and their fellow Reddit-fueled stocks skyrocketed earlier this year. And blank-check companies, some backed by celebrities, are raising gobs of money.

Even Federal Reserve Chairman Jerome Powell has acknowledged the risk of overspeculation.

"You are seeing things in capital markets that are a bit frothy," Powell said during last week's press conference. "That's a fact. I won't say it has nothing to do with monetary policy, but also it has a tremendous amount to do with vaccination and reopening of the economy."

Yet another shortage as the economy reopens

Steel is just the latest shortage to hit the US economy as it recovers from a pandemic that scrambled supply chains and set off sharp shifts in demand.

Everything from computer chips and lumber to chlorine and tanker truck drivers are in short supply. Manufacturers, restaurants and other businesses are also desperate for workers.

Meanwhile, the International Energy Agency warned this week that there isn't enough copper, lithium and other raw earth minerals available to make global clean energy ambitions a reality. The world risks "running out of copper," Bank of America strategists said in a recent note to clients.

Much like lumber, the steel industry was caught off guard by the rapid recovery in demand that began last summer — especially in the auto industry.

"All of a sudden people were buying lots of cars," said Tanners, the Bank of America analyst.

And it took time for America's aging steel mills to resume the production they had sharply cut at the onset of the pandemic. Steel inventories shrank rapidly and shipments were delayed, just as steel buyers began ordering more than usual.

'Peak' prices?

The good news, for steel buyers at least, is that analysts say all of the US steel production capacity that was idled during the pandemic has returned.

That's why Tanners said she's very confident the shortage will soon end, causing steel prices to collapse. History shows that steel stocks "tend to peak" a month or so before steel prices, Tanners wrote in her report.

She said US Steel in particular is vulnerable to a commodity downturn because it has the most amount of debt and the greatest need to spend to upgrade its plants.

But for now, steel stocks may continue to look attractive to investors because the industry is minting money at the moment. The North American flat steel sector is expected to generate record earnings in 2021, according to Citigroup.

"Current steel prices are peak (or close to it) ... and will correct sharply lower at some point," Citi analyst Alexander Hacking wrote in a note to clients Wednesday. "The current scenario presents investors with the classic peak earnings dilemma."

Hacking warned though that steel stocks can't escape a commodity downturn. "We can recall exactly zero examples where steel equities have gone up during 25%+ metal price corrections," he wrote.

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This article is forwarded from CNN BUSINESS.