Steel Market Reeled Back
The world major steel exporter, China, set to lowering the prices. The drop hasn’t been significant so far, just 5 percent, but the metal makers of Russia will also reduce the cost of their product in the fourth quarter. Although the majority of analysts say the decline is of seasonal nature and the prices will peak in 2009, quite a few believe that the maximum has been passed this year and the steel prices will be shedding from now on.
One of the global steel leaders, Baosteel, will cut down prices by $29.24/ton to $43.86/ton on average in October, Interfax-China reported yesterday. The given reasons vary from the drop in the iron ore prices that China imports from India to the diminution in domestic demand. A ton of hot-rolled steel cost $870/ton in July in China, Lehman Brothers calculated.
China is one of key exporters of steel and its prices directly affect the prices worldwide. So, the reduction in steel price, which, under the Deutsche Bank estimate, stepped up by 140 percent from 2004, could be viewed as the beginning of downward trend.
The forecasts of experts differ. “Steel production is a seasonal business with prices declining from year to year in the fourth quarter,” said Olga Okuneva, who is the metal analyst at Deutche Bank. “I don’t think the peak of steel prices has been passed. Prices for steel and rolled metal will be higher in 2009 than in 2008,” she specified, forecasting stabilization after 2009.
But the analysts of Lehman Brothers are less optimistic, projecting the 5-percent decline in steel and rolled metal prices in 2009. According to China Securities Journal, the general expectation is that China will cancel or lower the duties on steel product export due to the general growth of output. At the same time, the economy in Europe and the United States is projected to slow down. The result of this combination could be the balance of demand and supply on the market, which influence the prices will hardly escape.
www.kommersant.com
All the Article in Russian as of Aug. 28, 2008
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