Fitch forecasting slow growth for steel, auto sectors in 2010

Dec 16, 2009 | 10:57 AM | Scott Robertson

Demand for steel should recover at a modest pace during the next 12 to 18 months, although it won't reach peak levels in the medium term, Fitch Ratings said in its Worldwide Steel Outlook.

Steel pricing should be constrained by excess capacity, but raw material price increases are expected to be passed through. Excess or below-cost production should be limited, and regional differences in steel market dynamics have re-emerged and will be a major influence on steel producers' profitability and cash flow generation in 2010, Fitch said.

"Steel producer earnings were severely affected over the last year, but most companies rated by Fitch improved their liquidity through cost reductions, working capital management, dividend reductions and credit facility amendments," Monica Bonar, a director at Fitch, said in a statement. "These measures should serve well over this period of slow recovery, and financial leverage should decline over the year. Ratings remain under pressure, given the severity of the downturn and limited visibility on the recovery."....