"U.S. steel prices continue to fall" says S & P
In its semi-annual industrial metals survey, Standard & Poors predicts U.S. steel prices will continue to fall until they stabilize in 3 to 4 months.
S&P believes that the deteriorating market conditions in 2005 are due to accumulation of excess inventories in late 2004 as well as weakness in the
automotive sector.
Based on its forecast of 3.5 percent GDP growth in 2005 versus 4.4 percent growth in 2004, Standard & Poor's expects a decline of four to six percent in the volume of tons of steel shipped in 2005 from last year.
This breaks down as follows: a one to two percent decrease in shipments to service centers versus a gain of 4.6 percent in 2004; a seven to eight percent decline in shipments to automakers versus a 4.9 percent gain in 2004; and an increase of one to two percent in shipments to the
construction center following a 4.9 percent gain in 2004.
Production cutbacks by steel producers and a rebound in demand from automakers will likely strengthen prices after the market stabilizes.