Friday, October 09, 2009

Continuing uncertainty in Steel Industry

German iron and steel production rose during September, suggesting demand was improving, but was still down sharply from a year earlier as the market remained weakened by the economic downturn.

German mills produced 3.5 million tons (3.17 million metric tons) of steel for the month, an 8 percent increase on the previous month. Year to date however production remains 40% down on 2008.

In an interview with the Financial Times Wolfgang Leese, the CEO of Saltzgitter criticised rival steel manufacturers such as Arcelor for increasing production during poor market conditions."We only have a small temporary peak that in my view will last until the end of the year roughly," he continued, referring to demand stemming from inventory restocking.

Whilst both orders and steel prices have risen recently, we believe restocking to be the primary cause, an effect that is likely to be short lived.

Despite the recent price increases, there are signs already that increases have stalled, and some slippage is already evident, particularly in China.




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