More steel industry consolidation on the way Fitch

Dec 31, 2007 | 06:15 AM |

Fitch Ratings Inc., New York, expects further consolidation in the global steel industry in 2008 as producers seek to diversify geographically, rationalize production and gain additional access to raw materials.

The overall outlook is stable for the steel industry in 2008, Fitch said, echoing comments by Moody's Investors Service Inc., New York, last week (AMM, Dec. 28).

Globally, strong consumption trends in developing nations are offsetting weakness in the United States, Fitch said. The stage is set for steel price increases in most markets in 2008, but tight raw materials markets likely will cause margin compression for producers who don't control their sources of iron ore, coke, pig iron and scrap.

Mexico is a good example of a developing nation demanding more steel, Rodrigo Vazquez, a market analyst at Harbor Intelligence SA de CV, Monterrey, Mexico, said. Harbor Intelligence predicts Mexican steel production, at an estimated 16.3 million tonnes in 2006, will increase by about 6 percent in 2007.....