This Standard & Poor’s report summarizes the comments, questions and answers that arose during a discussion with investors hosted by analysts from Moody’s Corporate Finance Group’s steel team. Here are some of the many insights provided:
- Moody’s outlook for the European steel industry is negative. They think that the profitability of the European steel industry will be lower in 2013 than in 2012 as supply will continue to outstrip demand amid prolonged economic weakness. However, at some point the profitability trends will flatten and perhaps we’ll see this in the second half of this year, in which case we would stabilize the outlook.
- The outlook for Russian producers is more favorable than for their Western European counterparts. Moody’s expects steel consumption in Russia to increase by 3%-4% this year, underpinned by modest growth in the Russian economy and strong end-user demand. Russian players have low cash costs and their capacity utilization should be greater than 85% (versus less than 75% for Europe as a whole), helping their profit margins.
Standard and Poor’s comprehensive Steel Roundtable Q&A Highlights on the European Steel Industry is seven pages long, and is valuable for everyone from the first time investor to the industry expert.