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Steel Demand Won’t Recover Before Second Half, Fitch Predicts

January 5, 2009 at 21:12 by Mario

Steel demand won’t recover before the second half and annual contract prices for iron ore will decline 20 to 40 percent, Fitch Ratings said.
Prices for steel and the raw materials used to make it may improve before then, Monica M. Bonar and Sean T. Sexton, analysts at Fitch in New York, wrote in a research note dated Jan. 2. Metallurgical-coal contract prices will fall about 20 percent, they said.
“Demand for steel should improve following the aggressive expansion of central bank liquidity provisions since early September,” the analysts wrote. A recovery would be led by China, they said.
Steelmakers are cutting output, jobs and investment as the world tips into recession. Luxembourg-based ArcelorMittal, the biggest steelmaker, plans to eliminate as many as 9,000 jobs and slash production by more than 30 percent.
“Earnings will generally be down substantially for the next 12 months from 2008, which benefited from a robust first- half,” the analysts said.