Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

India Profits from Downturn in World Steel Production

Commodities / Metals & Mining Jul 05, 2012 - 08:26 AM GMT

By: Anthony_David

Commodities

The EU crisis and global recessionary trends have dampened steel production. With lowered prices and falling demand, steel producers are looking to cut costs by shutting down unprofitable plants. According to researcher World Steel Dynamics, prices for hot rolled steel have fallen by 12% since February 2012 and a further drop in price is expected. Capacity utilization is also down to 76% from 80%. To keep prices stable in the current global environment, steel production needs to slow down. Germany’s ThyssenKrupp AG is trying to sell its loss-making sheet-metal plant in Alabama, while Arcelor-Mittal has closed a Belgian plant and is idling some of its other plants.


Steel production had grown to a record1.5 billion metric tons last year on the back of projections of a strong demand for steel. Since then the EU crisis has killed Europe’s public infrastructure and construction projects and even China’s growth story has slowed down. However, steel imports into the U.S rose by 18.8% during the first quarter of 2012 due to demand from its recovering automobile and manufacturing industries.

The Chinese steel industry has been hit by overproduction, impacting margins due to a huge surplus. Falling demand is also seeing iron ore piling up in China’s ports, and fresh imports are being rejected due to lack of storage space. It has been reported that 41.2% of Chinese firms reported losses during Q1 of 2012 representing a 23-fold decline from last year . According to China Iron and Steel Association the growth in demand for steel fell to 8% in 2011 and is expected to fall by another 4% this year. Chinese steel companies’ woes were further compounded by China’s policy measures to rein in its domestic property market, which is a major steel consumer.

Declining Chinese demand for iron ore and falling prices could not have come at a better time for Indian steel producers who are facing a huge shortage of iron ore due to a ban on illegal mining in key iron ore mining regions in India. With the current gap between domestic and international iron ore prices, Indian companies are capitalizing on the advantage with iron ore imports.

Worldsteel indicated that India’s demand for steel is set to grow by 6.9% in 2012 and reach levels of 9.4% in 2013 owing to rapid urbanization and growing infrastructure investment. In fact at 6.9%, India’s demand for steel is twice the global growth. The Rio Tinto group is advancing its study of an Indian iron ore mine to take advantage of India’s growing demand for steel.

With a downturn in Europe and China, Russian steel major Evraz, is eyeing opportunities in North America. The company plans to invest around 6 billion dollars over the next four years to gear up to meet the growing demand for pipelines and railway lines in North America. Evraz has projected a growth of 4% per year through 2016 in the North American steel market.

In a protectionist measure the U.S. International Trade Commission voted to continue imposing anti-dumping duties on steel pipe and tube imports from Brazil, India, Korea, Mexico, Taiwan, Thailand and Turkey. Meanwhile China has decided to stop investigating an anti-dumping probe against Russian steel.

China has been very selective in allowing foreign direct investment in its domestic steel companies. Most recently, Arcelor-Mittal was prevented from becoming a majority stakeholder in China’s Hunan Valin Steel. South Korean Posco and Nippon Steel of Japan made better progress in acquiring stakes in Chinese companies as they focused on major value added steel areas. This is in line with Chinese policy to encourage joint ventures in areas where China can gain access to cutting edge and high-end technologies.

Russia’s entry to the World Trade Organization this year is being viewed with a mixture of wariness and anticipation. While some countries are jostling to get ahead in exporting goods and services into Russia, others are wary of Russian steel exports playing havoc with international pricing and negatively impacting European steel producers.

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report.

© 2012 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in