US steel consumption and prices to fall in 2005

Decreased demand and higher imports will lead to lower overall spot steel prices in 2005 compared with 2004, said

in its semi-annual survey on the industrial metals industry, published today.

In addition, Standard & Poor's believes that the worst is over for the year and steel prices should stabilise in the next three-to-four months, while aluminium prices will post a small gain over 2004. These and other findings are available in the report, Metals: Industrial Industry Survey, published twice yearly by Standard & Poor's.

Following a booming 2004, market conditions in the US steel industry deteriorated in early 2005. Standard & Poor's believes that declines in shipments, consumption and production were due largely to accumulation of excess inventories in late '04 at both distributors and original equipment manufacturers (OEMs), as well as less robust economic growth and weakness in the automotive sector.

Based on its forecast of 3.5 percent GDP growth in 2005 versus 4.4 percent growth in 2004, Standard & Poor's expects a decline of 4-to-6 percent in the volume of tons of steel shipped in 2005 from last year, breaking down as such: a 1-to-2 percent decrease in shipments to service centres versus a gain of 4.6 percent in 2004; a 7-to-8 percent decline in shipments to automakers (against a 4.9 percent gain in 2004); and an increase of 1-to-2 percent in shipments to the construction centre (following a 4.9 percent gain in 2004).