Reuters reported that a quick recovery for world steel and iron ore producers looks more remote every day the global financial crisis weighs on economic growth.
Mr Stuart Reynolds manager at Global Steel Consultants has presented a bleak revised medium to long term outlook for the steel sector on the first day of the 3 day America's Iron Ore Conference in Rio de Janeiro.
The conference's proceedings were largely drowned out by news across the world earlier in the day that BHP Billiton BHP abandoned its hostile takeover bid of Rio Tinto. Participants in Rio were widely tight lipped about the deal as many were restricted legally from making public statements about it. Others were simply reluctant to comment.
Mr Reynolds said that "It is a much less rosy picture today than it was just a few months ago. As each day passes it appears this slowdown will be longer and deeper in the developed countries of the United States, Europe and Japan and growth will be slower in the emerging world."
The broad study on world steel demand presented by Mr Reynolds suggested the most likely scenario would be for no growth in steel demand through 2012 and a similar fate is seen for demand of iron ore, the sole purpose for which is steel. He said that "There is, of course, the chance that the world could snap out of this and we could recover faster than expected but that looks much more remote now."
He said that "I think maybe term prices may move $5 per tonne up or down in 2009. China is still a big unknown for us. You could see that something was going to break when they announced budgetary investments of roughly half of their GDP. That is unsustainable. No country in history has done that."
He added that "Chinese demand for steel will probably grow but not so much that it will keep China from exporting steel because of the new capacity it will be pushing through by 2012. And that is what will hurt Japanese mills."