International credit ratings agency Fitch Ratings has announced a stable outlook for
US-based steel producers. The rating agency expects further credit and operating improvements for
US steel producers in 2013, although downside risks from global overcapacity remain.
According to Fitch's report, price increases are sticking and further increases are expected through the seasonally strong first quarter before easing, with modest expansions expected in margins after the contraction observed in 2012.
In the
US steel industry, demand is slowly growing from the auto, energy, and heavy equipment manufacturing segments, while demand from construction has dipped. Steel demand will continue to grow, albeit very slowly, according to Fitch's estimations.
Regarding capacity utilization, Fitch indicated that the
US steel industry is challenged by low capacity utilization which is about 76 percent on average in 2012, as a result of weak order rates, adding that margins are vulnerable when capacity utilization is below 80 percent, given the increasing raw material costs. The rating agency anticipates average capacity utilization to rise but not to exceed 80 percent on average in 2013.