Steel's Past is the Future. Cyclicality like the old days. MORE RISK - MORE REWARD.

Industry still alive and kicking – experiencing a speed bump in the industry’s New Continuum

Notwithstanding the gloom and doom in the steel marketplace, much of which is well founded given the strong likelihood that global apparent steel demand in 2009 may be 12% lower (our mid-low forecast) than 2008, WSD is nevertheless seeing many signs that the steel industry is alive and kicking. 

The steel marketplace is working well.  The prices of a number of steel products, especially on the international market, may have already hit the “V” bottom of this cycle.  The steel mills are in the process of effecting huge production cutbacks in all regions of the world. 

The “price allocates resource” phenomenon is working well in the steel industry.  For example, at current steel scrap prices, the sale of pig iron and DRI on the world export market, which amounts to about 35 million tonnes annually, has been largely shut down due to the pig and DRI producers’ high production costs.  Low scrap prices are also driving down, by at least 50%, the collection of obsolete scrap from levels attained earlier this year, say our contacts in the scrap business.

WSD expects that the current steel industry setback, severe as it is, three years from now will be looked upon as a speed bump – a period of temporary slowdown – in the industry’s New Continuum.

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