Platts quoted Mr Peter Marcus MD of World Steel Dynamics as saying that the price of oil will rise to USD 100 per barrel after 2010 and that development will be positive for steelmakers.
He said that "WSD submits that high oil prices, as long as they don't fuel inflation, are better than low oil prices from the viewpoint of steel demand and the overall growth prospects of the global economy."
Mr Marcus said that a high oil price environment creates an income shift from the advanced countries, which have a high ratio of consumption to GDP, to oil rich developing world countries that have a high ratio of fixed asset investment to GDP. Still, he noted that the phenomenon tends to drive down the standard of living in the advanced countries via the mechanisms of reduced disposable income for the consumer and weaker exchange rates.
He added that in the past few years there has been a good correlation between oil prices and production levels in an array of steel intensive goods producing industries.