| Author |
 Topic  |
|
|
n/a
deleted
81 Posts |
 Posted - 06/29/2009 : 03:20:15
|
Macquarie Securities Group in London believes steel prices should rebound by the end of 2009 from their massive decline during the recession, as Chinese demand picks up, Chinese exports slow and users in the United States and Europe resume buying.
Steel's longer-term outlook remains strong, said Jim Lennon, executive director at Macquarie, citing a slow rebuild of shuttered production capacity outside China relative to demand.
Speaking this week at American Metal Market's Steel Survival Strategies conference, Lennon forecast 2009 world steel demand at 1.214 million tonnes compared with 1.352 million tonnes consumed in 2008. Excluding China, demand should fall 19.9 percent this year to 702 million tonnes.
Biggest user China, should consume far more steel this year than any other region at 511 million tonnes, a 7.6 percent jump above its 475 million tonne demand last year.
China's demand will be 25 to 30 million tonnes higher than actual consumption, because buyers have undergone a heavy inventory restocking after a deep destocking period last year.
'That explains why we can come up with a production number of 540 million tonnes compared with 500 million tonnes last year, despite the fact that it will no longer be exporting 50 million tonnes. But the 540 million has upside rather than downside risk,' the analyst said.
Construction should dominate Chinese demand, with more than half of the total going to that sector. While export-oriented sectors should fall, China's domestic industries, like autos, shipbuilding, railways, oil and gas will all grow, he said.
So far this year, motor vehicle production was up 20 percent, shipbuilding rose 40 percent, and construction activity grew by 10 percent compared with last year.
By contrast, he said, he sees North American steel demand at 88 million tonnes this year, a steep 28.7 percent decline below the 123 million tonnes used in 2008.
Unlike the United States, where little government stimulus money has made it to infrastructure rebuilding, the Chinese government has devoted massive funds to infrastructure.
China's long steel product demand rose most sharply. Through May, it went up 23 percent year-on-year, whereas flat product demand was up only 2 to 3 percent, he said. Output also rose for long products, but fell for flat steel products.
'This suggests demand growth was very much been driven by construction, rather than flat product segments,' he said.
In anticipation of future growth, Lennon said, 'China has realized this is a once-in-a-lifetime opportunity to purchase cheap commodities and raw materials to modernize its economy.'
Imports of raw materials like oil, coal, and iron ore have soared. And it has been restructuring its domestic industries by closing many small, high-cost and dangerous coal and iron ore mines and replacing them with new ones.
'The risk is that when the rest of the world starts to pick up we get a renewed tightness in iron ore again,' said Lennon.
|
|
|
Ardent Listener
Administrator
USA
4841 Posts |
Posted - 06/29/2009 : 20:34:46
|
"By contrast, he said, he sees North American steel demand at 88 million tonnes this year, a steep 28.7 percent decline below the 123 million tonnes used in 2008.
Unlike the United States, where little government stimulus money has made it to infrastructure rebuilding, the Chinese government has devoted massive funds to infrastructure."
Boy, that says it all.
|
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
 |
|
| |
Topic |
|
|
|
Steel prices should rebound by year end -Macquarie
Forum Locked
