ThyssenKrupp upbeat on steel outlook

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30 Sep 2010

Global demand for all grades of steel is at record levels and will continue to hold up well into next year, said the head of ThyssenKrupp, in the most bullish remarks from a steel industry executive since the start of the worldwide economic recovery.
The upbeat comments bode well for steelmaking and mining, two of the world’s top heavy industries.
Ekkehard Schulz, chief executive of ThyssenKrupp, which makes high-quality steel, said production was running at full capacity and industry’s hunger for steel would exceed current output volumes at Germany’s largest steelmaker.
“Demand from the car, electronic and household appliances industries is very strong and we expect that to hold up well into next year,” Mr Schulz told the Financial Times ahead of this weekend’s World Steel Association’s conference in Tokyo.
His words were backed by projections from Meps, a UK steel consultancy, which predicts that world output will be 1.39bn tonnes this year, above 2008’s record of 1.33bn tonnes and well above what most observers expected at the end of 2009.
Mr Schulz’s comments also come as Vale, the world’s largest miner of iron ore, the main commodity used in steelmaking, forecast another bumper year for iron ore consumption and prices in 2011 on the back of strong demand in China.
“I continue to see the market being a little bit undersupplied,” said José Carlos Martins, head of ferrous metals at Vale.
Mr Schulz dismissed fears that the world economy would dip into another recession. “Nobody in the world believes in a double dip any more.”
Mr Schulz’s forecast adds to optimism in corporate Germany but contrasts sharply with more subdued outlooks from rivals.
ArcelorMittal, the world’s largest steelmaker, warned two months ago that a slowdown in China and ballooning raw material prices would hit profits.
But Mr Schulz said ThyssenKrupp would “reach the higher end of its profit guidance” for its fiscal year that ends on Thursday, suggesting it should turn last year’s pre-tax loss of €2.4bn ($3.3bn) into an adjusted pre-tax profit of up to €1bn.
Mr Schulz said ThyssenKrupp had not been hit as hard as expected by April’s decision by the world’s largest miners to switch from annual to quarterly contracts, a move designed to quickly pass on rising iron ore prices to steelmakers.
“The worst expectations have not materialised . . . we have managed to push through significant price hikes . . . from July.”

Source: Financial Times