Friday, January 11, 2008

Duferco predicts slowdown in steel industry

I was surprised to spot the following article, at a time when the steelmakers appear very "bullish" in pushing through price increases.

The global steel industry faces the possibility of its first prolonged slowdown since 2001 in the second half of the year, according to the head of Duferco, the world's biggest steel trading company.

Bruno Bolfo, chairman and owner of Duferco, said a period of lower prices and weaker demand might be expected as a result of a "delayed reaction" to the credit crunch, the impact of which is beginning to seep into some consumer businesses.

"You have to be concerned when you see the reports about the problems in the financial services industry. It is difficult to imagine these would not have some impact on steel," he said.

But Mr Bolfo - whose company is based in Switzerland - said there were a "lot of positive indications" for the steel industry that might reduce the impact on the sector of any general slowing in the world economy.

"China and India are still very strong [in terms of their demand for steel] and so is the Middle East," said Mr Bolfo. "It's as though in the past few years we have had 600m-700m new people added to the world [considering their impact on global consumption trends]."

Also, he added, demand for steel in sectors such as transportation and energy was still very strong - even in the US where much of the credit crunch has its roots.

Adding to worries that the steel industry could be moving into a weaker period, Posco, the world's fourth-biggest steelmaker, on Thursday reported a larger-than-expected 20 per cent fall in fourth-quarter profit, largely as a result of weaker demand for stainless steel.

If you read the specialist and financial papers, you will get a whole range of different forecast, you may have as much chance of forecasting the Grand national winner!

Full story at msnbc

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