Steel consumption `expected to fall`

World crude steel production has recovered to levels last seen before the global
financial crisis but consumption is expected to fall when stimulus measures in China
end, says ratings agency Moody's Investors Service.
Global steel production for the first calendar month of 2010 was a record at 113.4
million tonnes - exceeding the previous record for the month of 112.9 million tonnes
in 2008.
Production in February 2010 was 108 million tonnes, matching output in February
2008, which was a record for that month, according to a research note by Moody's on
Monday.
Global steel production had slumped to 86.8 million tonnes in January 2009 and 86.6
million tonnes in February last year.
Moody's said steel output has followed a V-shaped rebound from its lows around the
turn of calendar 2008-09 when the global financial crisis was at its height.
The increase in steel production underpins a similar V-shaped recovery in prices for
steel's main raw materials - iron ore and metallurgical coal.
Moody's said Asian steel producers had to pass on higher input costs to their
customers but a rise in steel utilisation would allow them to regain pricing power
and would more than offset the effect of higher costs.
However, an end to the Chinese government's stimulus packages would dent steel
consumption.
"These governments have withdrawn these incentives, or are planning to do so, which
means that the heady growth in demand for steel products will abate," Moody's said.
"We expect Asian steel producers' profitability to show considerable year-over-year
improvement in 2010 on the back of the robust economic growth in China and recovery
in exports, but higher input costs and persistent Chinese oversupply will likely
keep the level of earnings lower than it was pre crisis."