| Overcapacity puts steelmakers under pressure | Send to a friend |
| Monday, 23 January 2012 20:46 |
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Elliot said significant rationalisation was required, but added that political pressures would probably prevent downscaling as governments were under pressure to protect manufacturing jobs. “With government rationalisation unlikely to occur in the short term, successful steelmakers will need to become more nimble in their approach to changing market conditions. This will occur with improved technologies, lower cost structures, more vertical integration and greater partnering with key customers,” E&Y said. In its ‘Global Steel 2012’ report, it stated that the sector was anticipated to grow this year, but at a slower rate, with emerging economies expected to perform better than developed ones. In Europe, the steel sector was projected to grow by 2.5 per cent and by about 5 per cent in the North America Free Trade Agreement region. Meanwhile, Chinese steel production and consumption would continue to outperform the rest of the world. Further, the steel sectors in other emerging countries, such as India, Russia, Brazil and South Korea, would continue to grow, although the uncertain economic outlook could have an impact on these economies. In India, however, domestic demand for steel was creating a positive outlook, as the country was expected to perform better than others. “There are fewer domestic growth prospects, as well as increased competitive threats for steel players with an established footprint in Europe and North America,” E&Y noted. Europe and the US showed a weakness in both gross domestic product (GDP) and industrial production as GDP was forecast to grow by less than 2 per cent in 2011 and 2012, as opposed to an expected 9 per cent and 7.5 per cent growth in 2012 for China and India, respectively. During the last decade, growth in China’s steel consumption was 1.4 per cent in comparison to its GDP growth, whereas the correlation was less than 1 per cent for many developed economies.The E&Y report cited the International Monetary Fund’s forecast that the total GDP of emerging markets could overtake that of the developed economies as early as 2014. (Agencies) Add this page to your favorite Social Bookmarking websites           |
