Steel Demand Expectations Collapse To Late 2008 Levels

Thursday, Oct 22, 2009

Steel Business Briefing warns that demand expectations in the steel industry could drop as low as they did in December 2008, at the height of the global financial meltdown. With the downward trend expected to continue at least into early 2010, this is bad news for producers as end-use consumption is currently insufficient to boost further demand.

Roger Manser of Steel Business Briefing says, “At last week’s World Steel Association meeting in Beijing, mills in China stressed that their exports would not threaten overseas steelmakers. However, although their September finished exports were well below the 2008 levels, they were a year-to-date record.”

He continues, “In Europe as the market softens, mills need to keep unit costs down by increasing production, which further depresses prices.”

However, the producers in the World Steel Association are forecasting a year-on-year rise in consumption in the global market in 2010. They remain tight lipped on the subject of higher production, though.

Production in both Japan and Korea has rebounded. And in Europe, ArcelorMittal has boosted exports — in the first half, the EU-27 was the world’s largest finished exporter, though total volumes were down on 2008.

Traditional exporters like those mills in Russia, Ukraine and Turkey, faced with unusually weak domestic markets are expected to seek to boost exports, before cutting back production. In Turkey, especially, some commentators recently spoke of the need to cut output by 35%, which really highlights the extent of today’s over-production.

Source: Steel BB