Moody’s has published its latest update on the European, Middle East and Africa steel industry showing that the sector’s outlook will remain negative due to depressed steel prices.
“We expect weak demand, capacity utilisation below 75%, and falling raw material prices to keep downward pressure on steel prices, not only for hot rolled coil but also for long carbon steel products used primarily in construction, high-strength steel used in transportation and engineered products, and stainless steel,” says Steven Oman, a Moody’s Senior Vice President and author of the outlook update.
Moody’s expects:
− the profitability of the European steel industry to be lower in 2013 than in 2012, with no impetus for a change in steel market fundamentals visible at this time;
− the prolonged weakness of the European economy affecting every steel-using end market in Europe is starting to dampen demand in other regions, for example forcing CIS producers to rely heavily on domestic sales;
− reduced European exports of cars and capital goods due to slowing GDP growth in US and Asia likely to worsen the steel supply-demand imbalance
− profitability of Russian and CIS operators will shrink in 2013 but companies like NLMK and Severstal OAO will direct sales to their home markets, where steel demand is expected to grow by 3%-5%.