Peter Marcus, World Steel Dynamics: Steel demand may not recover in 2010

Thursday, 16 April 2009 17:15:09 (GMT+3)   |  
       

At the Arab Steel Summit 2009 held lately in Abu Dhabi, World Steel Dynamics' managing partner Peter Marcus underlined that steel demand in 2010 may see little or no recovery, notwithstanding increased governmental infrastructure projects, since continued deleveraging (attempts to pare debt and build equity) by households, enterprises and financial institutions may more than offset governments' leveraging efforts.

Mr. Marcus stated that the production outlook is poor for many steel intensive products including trucks, ships, rail cars, barges, containers, industrial racks, high-rise buildings, low-rise commercial buildings and shopping centers and oil drilling rigs, while consumers may continue to restrain their purchases of automobiles and appliances.

Commenting that hot rolled pricing in the world export market is now in its second "V" pattern of the "W" since October 2008, Mr. Marcus indicated that a "technical" steel price rally for hot rolled band both in the US and in the world export market seems likely within a few months. He added, however, that the question is whether or not prices plummet another 10 percent before this happens.

According to Mr. Marcus, the leading Indian steel companies may be among the better performers in the global industry this year reflecting the weaker rupee, inherently low iron ore costs, purchases of coking coal from Australia at far lower prices, productive workers and perhaps only a small decline in Indian steel demand.

On the other hand, Mr. Marcus said, "The global steel industry is tumbling down the cost curve. The average operating cost to produce hot rolled band, before higher fixed costs due to the lower operating rate, by June 2009 may be $280/mt less than in September 2008. The average operating cost this June, globally, may be only about $380/mt."


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