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Moody's offers a negative Outlook for the steel sector in Asia

13 December 2016

The company Moody’s Investors Service made a negative Outlook for Asian metals market. Profits of Asian steelmakers in the next year, according to forecasts, will be very high. According to experts, the decline in profitability is due to lower profitability and production.

However, against the background of General decline, it is expected an even greater growth of the Indian steel industry. In India, steel consumption should grow, unlike the rest of Asia. Despite the global glut and growth of steel imports, the government will continue to support the metallurgists.

In the most recent report, Moody’s notes that companies will not be able to keep profits from falling. Probably the demand for products will decline. Net profit will decline. The reason for that will serve as high prices and unreasonably high offers.

Experts suggest 2017 will be a year of lower production of steel products. Since it is assumed the decline in steel demand from main consumer China. The share of Korea accounted for three-quarters of the gross production of the region. According to the forecasts in China can change the volume of real estate sales. This will affect the tightening of measures for regulation of Chinese administration. Thus, the decline in GDP in the state, probably directly proportional to affect the production of the country. And this, in turn, will affect the demand for steel and its derivatives. Exports from Asia will also be rather limited. This can be concluded based on the limitations of the Asian export to Europe, America. This is also a very important factor. As for many Asian countries export to Western countries — the main focus of sales. For countries such as Taiwan, Japan, Korea, exports account for about half of production.

But Moody’s expects the decline not only for Asia but for the entire global industry. In addition to Asia the most pessimistic forecast was made for Russia. This year, the demand for Russian steel fell by five percent. For analysts, it remains unclear whether the metallurgy of Russia to recover. The forecast was influenced by incomplete utilization of the metallurgical production capacity. Now production uploaded to seventy to eighty percent. The solution in this situation would be the increase in exports. But this next year will be difficult.

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