Question-and-Answer Session
Operator
(Operator instructions).
The first question is from Mr. Arthur Hatfield of Morgan Keegan. Please go ahead, sir.
Arthur Hatfield -- Morgan Keegan
Thank you. Good morning, everybody. Brian, just a couple of questions about the pricing dynamics. First, theoretically, when we get back into balance of supply and demand, how long does it typically take for pricing to start to accelerate after you see that balance? And then secondly, are you seeing anything structurally within the business that is changing how pricing is measured or agreed upon? Are there any structural changes in the pricing aspect of your business? And also, again, the question about lag.
Brian Sondey
Well, I think -- we talked before that usually in our business, lease pricing is really driven by container prices, that usually, there is a very high correlation between the supply and demand for containers, given the short ordering cycle for the containers. And so, again in most market environments, the thing that drives lease rates is just container prices and a little bit of competition among the leasing companies and some supply and demand dynamics. This year is a little different, in that the main thing driving lease pricing right now is just the bet about how long is it going to take until the supply and demand situation for containers comes back into balance.
And so, you are seeing leasing companies agreeing to put containers on hire to customers, and this includes us, at rates below the level we typically would do relative to where we think container prices are, just because, in our view at least, like we sell for more quarters, before the excess inventory of containers gets absorbed. And so to some extent, there is benefits to be had by putting containers on hire now to avoid storage costs, generate some revenue doing the period when they might not be on hire otherwise.
Going forward, once you get back to a situation where the supply and demand of containers is back into balance, I think it is actually going to be a decent pricing environment for us. In terms of container prices, steel prices in China have held up pretty well and there has been a lot of new stories recently about prices moving up even further on the -- or I guess premised on the domestic demand for steel in China. And in addition, we think the competition we face from ownership of containers directly by shipping lines as well as competition from smaller leasing companies that in the past have been funded by the KG markets, that should be I think more limited in the next several years than it was before the summer of 2008, and that should be helpful to the pricing environment.
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