Global steel in recovery, but ratings on the hop

Fitch Ratings expects to see demand for steel to recover from low levels at a modest pace over the next 12-18 months but not to reach peak levels in the medium term, according to its 揥orldwide Steel Outlook.? The company said pricing should be constrained by excess capacity but raw material cost increases are expected to be passed through. Excess or belowcost production should be limited. Regional differences in steel market dynamics have re- emerged and will be a major influence on steel producers? profitability and cash flow generation in 2010. 揝teel producer earnings were severely affected over the last year but most companies rated by Fitch improved their liquidity through cost reductions, working capital management, dividend reductions and credit facility amendments,?stated Monica Bonar, director at Fitch. 揟hese measures should serve well over this period of slow recovery, and financial leverage should decline over the year. Ratings remain under pressure given the severity of the downturn and limited visibility on the recovery.? Fitch says worldwide steel trade has fallen more than production as a result of sharply lower demand in importing nations coupled with low capacity utilization and short lead times at domestic steel mills. Producers relying on exports will be exposed to price competition approaching marginal cost, intensifying trade barriers, and currency fluctuations.Nike Sneakers