Low European steel prices support a negative forecast for the EU steel industry - Moody's

In their updated report on Europe, analysts by Moody's agency reported that the forecast for the European steel industry remains negative for the next 12-18 months as a result of low steel prices.

In a new report entitled “European prospects of steel industry, they remain negative, since restoration can take more time” (European Steel Outlook Remains Negative As Recovery Longer to Materialize), senior vice president of Moody Oman wrote: “We expect weak demand, the use of production capacities below 75 percent and the continuation of the drop in steel prices and metal rolls intended for the construction industry, for high -strength steel for an automobile industry and engineering communications, as well as stainless steel.” Simultaneously with the fall of prices for steel, construction of frame houses of price which today are at the lowest level over the past three years.

The depression of the steel industry affected the ratings of almost all European issuers studied by Moody's analysts. The promising indicators of Thyssenkrupp AG (BA1 negative), Aperm SA (B1 negative) and Schmolz + bickenbach AG (B3 observed) are revised. At the same time, Arcelormittal (BA1 is negative) can be revised for the better, since the company's steel capacities are dispersed around the world and, in addition, Arcelormittal pursues a policy of expanding its own production of iron ore.

The decline in Europe forced manufacturers of steel in the CIS to a large extent rely on sales in the domestic market, writes Moody's.

The agency analysts believe that the demand for steel in Europe will be reduced by another 2 to 4 percent by the end of the year.