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Asian Steel Companies will start the New Decade on Negative Footing - Moody's

Steel News - Published on Wed, 04 Dec 2019

Image Source: Steel Demand
Moody's Investors Service says its 2020 outlook for the Asian steel sector is negative, reflecting weakening profitability for rated steelmakers amid softening demand, declining steel prices, and elevated iron ore prices. Moody's Vice President and Senior Credit Officer Mr Kaustubh Chaubal said "The rated Asian steel producers are coming out of a challenging 2019, with profitability, as measured by EBITDA per ton, down around 25% over the year, and we expect the subdued operating environment will lead to another 5% drop in 2020. Fortunately, this follows strong growth in 2017-18, and at the current rate we expect profitability to return to levels seen during 2015-16. With improved capital structures, the steelmakers are better placed this time around to weather weaker profitability.”

Across the region, soft demand from the property and manufacturing sectors will limit Chinese steel demand growth. Over in Korea, demand will soften because of sluggish construction and auto sectors, while the falling needs of the manufacturing sector will be the main driver behind Japan's softening steel demand. Similarly, demand will slow in India because of weak auto and manufacturing demand.

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Posted By : Arun Huidrom on Wed, 04 Dec 2019
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