Moody's forecasts a stable US steel industry in 2004

Moody’s forecasts a stable US steel industry in 2004

The international rating agency Moody's Investors Services has recently announced that the outlook for the steel industry in the US is stable for this year. Moody's based this expectation on the fact that the reasonable growth seen in industrial production, as well as rising prices, will compensate the overcapacity and increasing input cost problems of 2003. Additionally, it is expressed that the repeal of S201 safeguard measures will have a very slight effect in the short run on most steel producers in the US. Furthermore, operating performance of the steel companies manufacturing stainless steel bar, rod and wire that were able to reap advantages of S201 unlike many others due to exemptions granted after implementation of these measures, will probably descend. However, in general, operating performances are expected to improve. According to Moody's, in 2004, US steel producers should make effective use of the slight increase in demand that derives from the increase in auto production, commercial and public sector construction as well as residential construction which keeps its strong trend. This year, capital expenditure is expected to rise in the US due to expanding capacity utilization and input costs to surge worldwide as global demand for feedstock such as iron ore, coke and scrap is getting firmer and shipping rates and natural gas prices are going upwards.