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Moody's Downgrades US Steel Industry Outlook to Negative

Steel News - Published on Mon, 07 Oct 2019

Image Source: The Priint
Moody's Investors Service in a new report said that the outlook for the US steel industry has been revised to negative from stable. The outlook change reflects ongoing weakening in economic indicators, falling steel prices and downward revisions in outlooks for the global manufacturing and chemicals sectors. Moody's Senior Vice President Carol Cowan said "The price for hot-rolled coil, the benchmark steel price, declined steadily since the second half of 2018, save for a short-lived bounce in August. The high prices seen in the first half of 2018 were not supported by underlying demand fundamentals, however, but more the market's expectation of the US imposing import tariffs, as well as supply concerns, and as such, some price correction was expected."

Another negative development for steelmakers has been the decline in US auto sales, which are forecast to decrease 16.8 million units. As well, steel capacity utilization has been edging lower and Moody's analysts do not expect the trend to improve due to softening demand.

Imports, which have already been suppressed by tariffs and quotas, will be further muted by low prices. Lower prices provide less ability for steelmakers to import to the US at a profit. Nonetheless, weakening demand and the drop in scrap prices will keep downward pressure on steel prices.

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Posted By : Sanju Moirangthem on Mon, 07 Oct 2019
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