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Dull Steel demand to stay in 2009 – Experts

Dull Steel demand to stay in 2009 – Experts
It is reported that the worldwide financial crisis has spread into ...

It is reported that the worldwide financial crisis has spread into broader economy and plunged a host of steelmakers into huge losses. And many steel experts suggest a difficulty path for next year with bleak demand prospect amid the sustained global economic woes.

United Nations said this month that if the economic stimulus plans unveiled worldwide are not so forceful or timely global economy might deteriorate further. And world economy growth rate next year may slump to 1% from 2.5% this year.

China Iron & Steel Association said that the retreating economy has hurt China"s steel export significantly despite the nation"s export taxes removal for steel products under 67 tariff codes as of Dec 1st, which is believed to lower export costs. And China"s steel shipment in 2009 will continue this year downtrend.

Meanwhile, the possibly export falls for electromechanical and household appliances next year will also result in steel export drops indirectly. And CISA advises domestic steel exporters to shift their shipment destinations to emerging markets.

Analysts said that the international trade protectionism may also fully offset the positive effects brought by the export duty removal. Some institutes in EU and US have filed requests to levy anti dumping duties on steel and metal products imports from China.

As per report, Beijing has loosened its earlier tightening monetary policy and increased fixed assets investment since Q3 to trigger home consumptions and decided to add investment by CNY 4 trillion in the coming 2 years for infrastructure construction, which are bullish signs for steel market. And experts estimate the huge capital injection could produce steel demand by 150 million tonnes.

However, the impact of the policy would not be felt until the H2 of next year since there is a time lag of 1-1.5 years between the time of policy release and the time that demand comes.

And experts speculate that falling steel demand growth will drag on next year with annualized apparent steel consumption posting at less than 600 million tonnes off 10% from this year. And they suggest steel producers to gird for a lengthy market downturn since the global financial crisis is set to cause greater damages to physical economy in days to come.

Steel mills must keep production in tandem with sales and tie up with traders to survive the market winter CISA proposed. Underselling is strictly prohibited the association emphasized.

Dec 22, 2008 13:22
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