Wire World reported that steelmakers will have to extend severe production cuts into the third quarter to cushion a further slide in prices as hopes for a demand recovery any time soon fizzle in the face of the global recession.
Mr Michael Shillaker steel analyst at Credit Suisse said that "The industry needs to maintain the supply discipline through the third quarter. The global destocking through the value chain as deep as this means it was never going to be a cycle that's solved in one or two quarters."
It may be noted that global steel demand and prices have collapsed after hitting a peak in mid 2008, as the global economic downturn knocked consumption in key steel using sectors such as automotive and construction, forcing millions of tonnes in capacity to be idled, freezing investment plans and slashing jobs. Still more capacity is added as equipment makers ship orders procured in the beginning of last year.
Figures from the World Steel Association highlighted the demand outlook was probably somewhat worse than previously thought. The industry body forecast a 15% fall in steel demand in 2009, the steepest in more than half a century.