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Wednesday, 8 October 2008
Steel Shares Slump as Mainland Firms Plan Output Cut
Shares of Asian steel firms, led by Japan’s Nippon and JFE, slumped more than 10 per cent on Wednesday as concern grows that a global credit crisis will drag economies into recession and dampen steel demand. PDF
Steel Shares Slump as Mainland Firms Plan Output Cut
Reuters 8 October 2008
Shares of Asian steel firms, led by Japan’s Nippon and JFE, slumped more than 10 per cent on Wednesday as concern grows that a global credit crisis will drag economies into recession and dampen steel demand.
Global steel prices, which earlier this year hit record highs on robust demand from emerging markets and mainland, are easing and steel firms are considering cutting back output to shore up prices as demand weakens from the auto, construction and appliance sectors.
Four big mainland steelmakers have agreed to cut production until prices stabilise, joining ArcelorMittal, which said last month it may cut output by 15 per cent.
“The price of steel declined a lot, so the steel companies decided to cut production until prices are stable,” Zou Jian, chairman of the China Metallurgical Mines Association, said on Wednesday.
He said Shougang Group, Hebei Iron & Steel Group, Anyang Iron & Steel and Shandong Iron & Steel agreed earlier this week to cut output by between 10 per cent and 20 per cent.
He said the agreement involved steelmakers in Hebei province, which encircles Beijing, but other firms were also affected by the low prices.
“Iron ore imports may decrease but won’t stop. China needs to import half the iron ore it uses for its steel production,” he said.
Shares of mainland steelmakers Angang and Wuhan Steel dropped more than 6 per cent, while India’s Tata fell 7 per cent and Australia’s BlueScope lost 6.2 per cent.
Fears of a fall-off in demand have battered shares of global steel companies, with mainland’s Baosteel down 63 per cent and Nippon down by more than half so far this year.
By 12.30pm HK time, shares in Nippon Steel, the world’s No 2 steelmaker after ArcelorMittal, had dropped 12 per cent to a 3-year low and smaller rival JFE slumped 13.5 per cent.
In South Korea, shares of Posco shed 6 per cent and Hyundai Steel dropped 12 per cent.
With mainland’s economy showing signs of a slowdown, the world’s largest steel producer has increased exports to record levels in the past two months, exacerbating the fall in world steel prices.
“Spot prices are falling from all-time highs in most regions and we believe steel companies are likely to show strong near-term earnings, but guide to lower earnings and falling margins,” Citigroup said in a report this week.
But efforts to tighten supply amid weakening demand may have limited success as steel majors such as Nippon, JFE, POSCO and Germany’s ThyssenKrupp have said they are not considering a production cut.
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Steel Shares Slump as Mainland Firms Plan Output Cut
Reuters
8 October 2008
Shares of Asian steel firms, led by Japan’s Nippon and JFE, slumped more than 10 per cent on Wednesday as concern grows that a global credit crisis will drag economies into recession and dampen steel demand.
Global steel prices, which earlier this year hit record highs on robust demand from emerging markets and mainland, are easing and steel firms are considering cutting back output to shore up prices as demand weakens from the auto, construction and appliance sectors.
Four big mainland steelmakers have agreed to cut production until prices stabilise, joining ArcelorMittal, which said last month it may cut output by 15 per cent.
“The price of steel declined a lot, so the steel companies decided to cut production until prices are stable,” Zou Jian, chairman of the China Metallurgical Mines Association, said on Wednesday.
He said Shougang Group, Hebei Iron & Steel Group, Anyang Iron & Steel and Shandong Iron & Steel agreed earlier this week to cut output by between 10 per cent and 20 per cent.
He said the agreement involved steelmakers in Hebei province, which encircles Beijing, but other firms were also affected by the low prices.
“Iron ore imports may decrease but won’t stop. China needs to import half the iron ore it uses for its steel production,” he said.
Shares of mainland steelmakers Angang and Wuhan Steel dropped more than 6 per cent, while India’s Tata fell 7 per cent and Australia’s BlueScope lost 6.2 per cent.
Fears of a fall-off in demand have battered shares of global steel companies, with mainland’s Baosteel down 63 per cent and Nippon down by more than half so far this year.
By 12.30pm HK time, shares in Nippon Steel, the world’s No 2 steelmaker after ArcelorMittal, had dropped 12 per cent to a 3-year low and smaller rival JFE slumped 13.5 per cent.
In South Korea, shares of Posco shed 6 per cent and Hyundai Steel dropped 12 per cent.
With mainland’s economy showing signs of a slowdown, the world’s largest steel producer has increased exports to record levels in the past two months, exacerbating the fall in world steel prices.
“Spot prices are falling from all-time highs in most regions and we believe steel companies are likely to show strong near-term earnings, but guide to lower earnings and falling margins,” Citigroup said in a report this week.
But efforts to tighten supply amid weakening demand may have limited success as steel majors such as Nippon, JFE, POSCO and Germany’s ThyssenKrupp have said they are not considering a production cut.
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