Fitch is expecting slower increase of demand on steel and production of steel in the second half of 2011

/IRBIS, July 14, 2011/ - Fitch Ratings expects slower growth in steel demand and steel production in the second half of 2011, as emerging markets will fight inflation, and the advanced economies to deal with fiscal instability, was indicated in the report released July 13 by Fitch. As indicated, the positive effect of expected slower growth is slowing of capacity increase with average global capacity utilization ratio of 81%. Fitch believes that the deficit of supply low-cost iron ore and coking coal will continue through 2013, inclusive, resulting in raw material prices in the reporting period to exceed 2010 levels. Attractive yields on iron ore and coking coal, as well as the benefits of vertical integration for steel companies will continue to support activity in mergers and acquisitions. Number of steel companies, which are expected to have sustainable benefits include: 1) companies with the integration of raw materials depends on the cost of captive power, 2) producers with relatively high share of high value added steel products based pricing at a premium, and 3) companies with large scale operations that can afford to temporarily reduce production in periods of calm in the market to reduce costs while continuing to meet customer demand. Fitch expects the companies of mining and metals sector will maintain discipline in the recovery period and will not expand their investment plans or capital structure to mitigate the systemic and geopolitical risk. "The rating outlook for the global steel industry and raw materials for this sector of industry is stable, and it is expected that the recovery will continue through 2013. In addition, the agency expects a smooth slowdown in China and a slow economic recovery in developed markets", - was stated in message. [2011-07-14]