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| Worst over for steel industry; optimistic about BRIC: Mittal |
| Press Trust Of India / Beijing/New Delhi Oct 13, 2009, 00:19 IST |
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Asserting that the worst is over for the global steel industry, steel tycoon Lakshmi Mittal expressed optimism about emerging markets’ recovery, including India, but is cautious about the prospects in the developed world.
“The economic turmoil since summer 2008 has been extraordinary and unprecedented. It seems that we are through the worst but the recovery is fragile and will be long drawn,” Lakshmi Mittal said at World Steel Association Conference in Beijing.
The signs of economic recovery are rising, primarily propelled by re-stocking of used up inventories and stimulus packages. Moreover, the prospects of emerging market economies are looking bright.
“I remain cautious about the developed world. But I am optimistic about the developing world — and in particular the BRIC countries — which is rebounding more swiftly than many had envisaged,” Mittal said.
As per the latest International Monetary Fund forecast, China would witness a 9 per cent growth in output in 2010, followed by India with 6.4 per cent, while Brazil is likely to record 3.5 per cent growth in output.
China and other developing economies are on their path of industrial development and on the basis of their basic fundamentals, are they likely to tread the growth path for some considerable time to come.
“This is why similarly Indian steel mills are back working at virtually full capacity; and in Brazil, demand is up 40 per cent from its trough,” Mittal said.
The situation in the developed world is however, less positive, though many advanced economies are now technically out of recession.
According to the World Steel Association, the short range outlook of global steel demand for 2010 would be around is 9.2 per cent to 1,206 mmt – equal to the levels of 2008.
“Although demand in 2010 is expected to be level with 2008, it will be some time yet before we return to the high production rates of recent years in all markets,” Mittal said.
The steel industry is now able to absorb some very large shocks. “Unlike the crisis of 2001 when many companies were forced into bankruptcy, we have not seen the same trend this time around,” Mittal said.
A year after the economic turmoil reached its peak, stimulus plans are taking effect while stock markets have delivered better results in the past quarter, he noted.
Further, a number of countries are formally out of recession and some developing economies are already back delivering strong growth, Mittal added.
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