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Moody's downgrades Asian steel outlook

Xinhua, July 13, 2015 Adjust font size:

Global rating agency Moody's has downgraded its outlook for the Asian steel industry to "negative", based on continental steelmakers' declining profitability amid a growing supply glut.

The outlook had been "stable" since August 2014, when it was changed from "negative", Moody's said in a report on Monday, adding that the outlook reflected its expectations for business conditions over the next 12 months.

"We expect Chinese steelmakers' earnings will decline considerably in the coming 12 months as the country's steel glut worsens amid declining demand and steady capacity," said Jiming Zou, a Moody's senior analyst.

In the first four months of 2015, Chinese steel demand, as measured by total output minus net exports, declined by 4 percent, versus a 2.5-percent drop in the whole of 2014, noted the report.

Steel demand from Southeast Asia and India will probably increase but will be insufficient to offset the decline in China, it said.

On the other hand, steel production and capacity will remain stable as Chinese steel companies increase exports, especially given the price premiums for steel outside of China, said Moody's. Endi