Emirates Business 24|7 reported that Global steel traders are urging manufacturing mills to further cut production to stem the slide in prices and avoid flooding the market with supply.
The financial crisis has curbed steel demand this year forcing production plants worldwide to cut their output or shut down completely. But traders believe with China's demand expected to drop 2010 more cuts are needed to keep the industry afloat.
Mr FD Baysal a trader from the United States based Seba International said that "Right now China has the capacity to produce 610 million tonnes this means there is 100 million tonnes extra with its current demand growth rate of 18%."
He said that "So with the growth expected to drop to 5% 2010 this will lead to a larger quantity that will be exported and could flood the world markets."
Mr Butch Zeederberg global head of Fe Trade DMCC said that traders based in the Middle East are equally backing the push for greater production cuts because of shrinking demand. In the UAE, demand dropped by 50% to 3 million tonnes 2009 compared with a year earlier.
He said that "Unless there is cutback in production, I see that the situation with the market's oversupply will go on and get worse."
Mr Zeederberg said that "The majority of the UAE's imports are from Turkey and I think in about 3 to 4 months we will see that the UAE will turn from an importer to an exporting nation as new rolling mills will add more than 100,000 tonnes of steel a month."
Steel producers in the Middle East have voiced their concerns about oversupply leading to increased dumping in the region. But traders believe anti dumping policies are not the solution. A Mumbai based trader said that "Steel traders will always find a way into a market and around the anti dumping laws."
(Sourced from Emirates Business 24|7)
