The great financial maelstrom of 2008 ravaged growth trends worldwide, leaving a cloud of uncertainty in its wake. But the steel sector is finally delving beyond the here and now, offering increasingly specific previews of the road ahead. The remaining challenge for Fools: determining which of those prognostications are correct.
South Korean steel giant POSCO
The steelmaker's outlook for the remainder of 2009, however, struck a markedly different tone. POSCO alluded to signs of recovery and expectations for rebounding demand from China as drivers of improved metrics in the second half of the year. The company believes that steel prices bottomed during the latest quarter, and it expects operating profit to more than triple from the $382 million (500 billion Won) recorded for the first half. With lower input pressures from reduced iron ore prices negotiated with Rio Tinto
Stop the presses!
Wait a minute, Fools. Wasn't it just a couple of weeks ago that I relayed Nucor
Bolstered by continued (albeit counter-cyclical) strength in shipbuilding activity, POSCO is beautifully positioned to benefit from stabilizing commodity demand from China and the relative economic strength of Pan-Asian economies. Accordingly, POSCO initiated only shallow production cuts as compared with less geographically blessed producers like ArcelorMittal
The mounting evidence from this ultimate bellwether industry is too clear to ignore. Asia remains in an ongoing process of decoupling from the economic fates of Europe and the Americas, and I believe that recognizing this phenomenon is critical to forging successful investment strategies.