Moody's Investors Service Company, a well-known rating agency, has recently raised its outlook for Asian steel industry from negative to stable, which is mainly based on that the region's companies’ earnings is expected to remain stable. And these stable profits are mainly from the balance between Chinese DE-Capacity and demands in Asia.
Asian steel industry's profitability in 2015 bottomed out and improved, Chinese industry fundamentals recovered, causing the steel sheet apparent consumption increased by 2.3%.And the DE-Capacity is better than expectation. China PMI index remained at 50 or more, also hinted that the manufacturing activities to is becoming better.
Moody noted that China continues cutting capacity, the government supplying which puts emphasis on reform and environmental protection measures become increasingly severe. All these forced inefficient mills to be closed and be merged with large steel mills.It is to be predicted that China steel apparent consumption will increase by 2.5% this year, the same amount with 2018.Next year real estate sales will contract, but the influence on steel demands is really limited. Mainly due to strong sales since 2016 will support new construction and growth of steel demands during the next few quarters.
Among Asia's major steel producers, India's demands are stronger, benefiting from the trade protection measures and a modest increase in demand. Japanese and Korean domestic demands remain stable and with the steel mill reducing costs and improving the production of high value-added products, companies’ profitability will be stable or slightly improved. Moreover, the growth of southeast Asian steel demands is also optimistic.