Moody's announces negative outlook for the Asian steel sector for 2017

Moody's Investors Service predicts weaker earnings for steelmakers for 2017, mainly driven by declining production and margins. However, India stands out as the only strong country in the region.

Steel demand in India is expected to rise in 2017. In addition, protectionist measures on the part of the country's leadership will support the metallurgical industry, amid global glut and growth in imports. It will be difficult for metallurgists in the region to pass the increase in raw material prices to customers as demand slows down over the course of the year.

The increase in steel production in India will not be enough to offset the decline in Asian production, as the country provides only about 8% of the region's steel production. Asian steel production is likely to decline, mainly due to declining demand for steel from China, which accounts for three quarters of regional gross production. By the way, Asian countries such as Japan, South Korea and Taiwan export about 40-50% of their steel production.