German steel industry cautiously optimistic for 2010
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After months of economic downturn, during which German steel industry output regressed to 1963 levels, the German Steel Federation (WV Stahl) has stated that the domestic steel industry has survived the worst period.
WV Stahl president Hans Jürgen Kerkhoff expects a year-on-year increase of 10-15 percent in crude steel production in Germany in 2010. However, against the backdrop of massive cost increases in commodities, 2010 is still assessed as a very difficult year for the industry, Mr. Kerkhoff said. Prices of basic commodities such as iron ore continue to trend high, as China continues to meet its demand from the spot market. Iron ore prices, which were seen at $64/mt in April 2009, have more than doubled since and are now floating at around $130/mt. The 2009 contract prices and current spot prices are clearly drifting apart. In addition, despite the crisis conditions seen in 2009, the benchmark price of iron ore was still about 33 percent above 2007 levels. According to Mr. Kerkhoff, the weak economy should have a reducing effect on prices but instead upward motion in prices has been witnessed.