Steelmakers gloomy on recovery prospects

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Jul 2009

The world's top two steelmakers posted quarterly losses and warned the industry's return to growth from the bottom of the economic slump would be gradual, with China leading the recovery while the West lags. Global leader ArcelorMittal forecast no return to pre-crisis activity levels before 2011 as both it and second-ranked Nippon Steel Corp saw weak demand and inventory write downs hit earnings. Japan's Nippon Steel said on Wednesday its loss in the six months to September would be worse than expected, while its bigger rival forecast only a slow pick-up over the rest of 2009 with output in developed countries below two-thirds of capacity through the third quarter. 
"We were at a very low level of economic performance... [so] to reach the pre-crisis level it will not be before 2011," ArcelorMittal CEO Lakshmi Mittal told a conference call. The steel industry is seen as a broad gauge of an economy's strength, and demand for the metal has tumbled along with activity in the key automotive and construction sectors. Cash-strapped customers have also tended to run down stocks rather than buy fresh steel, though that process appears to be ending.
The turnaround is being led by China, where the government is spending around $585 billion (Dh2,147 billion) on stimulus measures focused on infrastructure.
CEO Mittal said he expects demand for steel in China to rise 10 per cent this year.

Source: Reuters