Thursday, 21 November 2013 | 20:40
Rating agency Moody's has lifted its outlook for the European steel sector to stable, pointing to expectations of slight growth in the euro zone economy and improvements in car sales and the building materials industry going into next year.
Moody's has had a negative outlook on the industry since October 2011, but now forecasts potential economic growth for the euro zone next year of 0.5 to 1.5 percent and estimates apparent steel use could climb as much as 2 percent on the back of that, after an expected overall decline this year.
Weak demand in Europe has weighed on the sector's biggest producers, including ArcelorMittal, ThyssenKrupp and Tata Steel's business in the region.
"Despite the fragility in the euro area economy recovering, we are seeing the European steel industry starting to benefit from the slight improvement," says Denis Perevezentsev, senior analyst in Moody's corporate finance group.
Capacity utilisation, a major issue for the oversupplied steel industry, will remain at current levels into 2014 - estimated by Moody's at 75 to 77 percent - lower than the global average but unlikely to increase, given Europe's struggle to cut capacity at a time of economic weakness.
Moody's said it would change the European steel industry sector outlook to positive if capacity utilisation rose above 85 percent and the European (purchasing managing index) PMI remained above 55 "for several quarters".
Major producers such as ArcelorMittal, the world's No. 1 steelmaker, have in recent weeks said they believe steel prices had passed the low point of the economic cycle.
But steelmakers have varied in their view of how quickly the industry will recover. Tata reported an improved performance in Europe in its most recent quarter, but warned challenges remain.
Source: Reuters
Zijn wij het dieptepunt voorbij???Ik zeg jawel.