CISA expects steel market to rebound in H2 of 2009

China Business cited Mr Qi Xiangdong, deputy secretary general of China Iron & Steel Association as saying that China is still in the mid of urbanization and industrialization and has large demand for steel products

Mr Qi suggested a difficult path for the sector in the last quarter this year and the Q1 next year but expects the market recovery to come in the Q2, with conditions in the H2 better than the H1.

Mr Qi said that "Steel producers across the world are slashing production to tide over the market winter because the deepening global financial crisis has caused great damage to physical economies, sapping down stream demand significantly. In the mean time, the demand retreat has been exaggerated, swaying market confidence in steelmakers, traders and down stream sectors, who are unclear about the future directions."

Mr Qi said that "The fiscal plan will directly trigger the market demand for construction steel since most spending is focusing on infrastructure construction like airport, railway, road, etc, which all consume wire rod and H beam. Meanwhile, the renovation of grid and power station will bring consumptions for silicon steel sheet and the West East natural gas transmission project would help pipeline producers and the promotions of household appliances in rural areas will boost demand for HR/CR sheet etc."

He added that "The most important is clear about the market trends and arrange product mix according to market operations. Meanwhile, steel mills should put stress on costs and capital management, trying to maintain a healthy capital chain. And they should adhere to the central government's ten demand-driven measures in market development. He added that in the export front, mills should ship more materials to emerging markets, however, risks in exchange rates' changes should be considered."

information from www.steelguru.com