Steelmakers Cut Output
After experiencing low demand for the past six months, steelmakers worldwide have decided to cut its production by more than half.
According to some experts, the dwindling demand for steel is caused by economic slowdown which forced property and land developers from many countries to suspend construction.
Steelmakers worldwide has announced it will cut production by half as land and property developers have suspended construction due to economic slowdown, according to AFP report.
ArcelorMittal, the world’s biggest steelmaker, said it will temporarily cut its output by more than half to prevent overproduction that will cause the price to go down.
Meanwhile, some steelmakers have posted slumping sales due to low construction activities worldwide but still expressed optimism over the impending recovery of the US automakers, China’s bailout package, and the Middle Eastern developers plan to construct more buildings.
According to experts, the demand for steel has dramatically dwindled for the past six months as China and the Middle East have postponed construction due to the global financial crisis.
Meanwhile, analyst were not surprised with the steelmakers’ decision to cut its output saying that failing to do so would cause billions of losses as overproduction can force the price to go down.
In an interview with market analyst Perrine Faye, she said the steelmakers are trying to maintain its optimism as the demand for the material may bounce back after the Chinese government would inject bailout money from its ailing economy.
Last month, Chinese officials announced it will release bailout package worth $580 billion that is expected to push economic growth by 1.5 percent to nearly 2 percent this year.
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