When metal prices fall, steelmakers suffer the most. They earn less for every ton of metal sold, resulting in lower profitability and lower cash flows.
Some Indian producers have acquired distressed steel assets at relatively high levels. While this was done ostensibly for long-term profit, the short-term crisis could lead to some complications if steel prices continue to decline. These assets looked attractive given the high steel prices that prevailed at the time. With a fall in steel prices, these acquisitions may diminish low-profit.
Concerns about global economic growth appear to be taking their toll on commodity prices as factors such as the U.S.-China trade war don't really go away. China's economy is showing signs of slowing down, and weak demand in the global auto market is also a red flag for steel demand. Whether these problems will or not, it is possible to determine whether commodity prices will return in 2019 or remain. The winter months see lower activity anyway, so a clearer picture could emerge by early 2019.
Lower metal prices pose risks for Indian producers
|
Azovpromstal® 30 November 2018 г. 11:45 |
