CURRENCY Wall Street is sold on what a weak dollar buys for steel

Mar 01, 2008 | 01:30 PM |

Despite some Americans fretting over the U.S. dollar's demise, the people who follow the steel industry's financial fortunes see little to worry about on that count—with the picture not so bad for service centers, either.

"One of the functions of a weak dollar is to first raise the price of steel but also raise the demand" at domestic steel plants, said Aldo Mazzaferro, steel industry analyst at Goldman Sachs Group Inc. in New York. "The guys who must compete with imports coming into the country get a greater market share, or they export more," he said, citing the decline in imports that traditionally accompanies a lower dollar.

Moreover, in contrast to the steel recessions of 1991 and 2001—and despite an expected 3- to 4-percent falloff in total demand this year, with automotive leading the decline along with some softness in construction—Goldman Sachs estimates that U.S. apparent demand will actually rise by the same amount due to the need to replenish an inventory drawdown last year that Mazzaferro pegged at about 9 million tons, or around 7 percent of the market.....

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