In the fourth quarter of 2008, the global metals industry was rocked by unprecedented economic and market upheaval. As we move through the first quarter of 2009, conditions remain just as challenging.
The global economy overall is still paralyzed by the economic downturn. In addition to weakened end-use demand, many customers continue to reduce their inventories due to liquidity concerns. Steelmakers in North America are currently operating at a capability utilization rate of just over 40 percent — down from 90 percent during the same period last year.
So the question for 2009 becomes whether we have hit bottom. Is the slowdown in the real economy likely to prevent any meaningful recovery in 2009? Are we still in the midst of a metals commodity super-cycle — albeit with a slowdown — or is the industry resetting itself?
Finding answers to these questions can begin with a review of key issues facing the industry in 2009.