Most of the top Western players ... still operate at utilization rates in the 70- 80% range in Europe and the US. As the effects of restocking start fading away, a harsh reality is settling in, whereby real demand in Western economies will take a number of years before once again reaching its 2007/08 peak, with clear strategic implications. Excluding China, world crude steel production decreased by 21.5% in 2009, according to the World Steel Association. In general, restructuring and capacity mothballing will remain topical in mature markets, while most of the investments are directed towards emerging economies.
Click on chart to enlarge, courtesy of BNP Paribas.
On the raw material front, the industry is bracing for tough annual negotiations with mining companies, both for coking coal, iron ore and also secondary materials
(manganese, etc). While the industry is slowly moving towards spot pricing, annual negotiations for benchmark iron prices are likely to lead to substantial hikes, given
buoyant Chinese demand. As an indication, spot iron ore prices have relentlessly risen in the past few months and are now at record levels above $130 per tonne.
Click on chart to enlarge, courtesy of BNP Paribas.
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