Steel Business Briefing, Friday, 07 November 2008

The mood was sombre at the 5 November meeting of the UK's National Association of Steel Stockholders and its northeastern division NEASS in Wakefield, with many participants painting a gloomy picture of the outlook of most steel products.

High inventories and a sudden disappearance of demand were among the most depressing factors, as attendees acknowledged the manifestation of the financial crisis on a sector which they had hoped might escape the worst.

"Virtually overnight demand has crashed," one attendee told Steel Business Briefing. "It's not a gradual slowdown as we have witnessed in the past, because of the credit crunch," he added.

With many of the world's biggest steel producers reducing output, the downturn is widespread; the question is, when will the market rebound? "Buying will resume in two months, "said NEASS vice-chairman Laurence McDougall. "In January there could even be a tight supply situation as a result of production cuts. At Tomrods we have got no availability for some of our products," he added.

Others believe the upturn will take longer to appear.  Corus has apparently told one attendee that it will take until mid-end Q2 2009 to remove surplus stock from the market. The message from the producer, he said, was that stockists "won't make money until Q3 or Q4".