Steel Industry in Crisis

The steel industry is also hit by the crisis bug. After enjoying comfortable sales and margins for 3 quarters on an environment of escalating material prices, steel companies are now hit by high cost inventory due to the abrupt lowering of material prices this 4th quarter and low customer demand. Example is cold rolled coil ( CRC). The year started with CRC prices averaging at USD 700/MT. It continue to increase, peaking at almost USD 1300/MT during the 3rd quarter. Now it went down to as low as USD 600/MT. Scrap iron/steel was selling at P27/kilo but is now at just P5/kilo. Customers don't buy, waiting for prices to still go down. Many companies have stopped production. Massive cost reductions are undertaken, from energy and power to manpower costs.

We've got news from a friend in the Middle East who said that Emirates Steel is on total shutdown; so are Hadeed and Unicoil in Saudi Arabia. At Global Steel in Iligan, which during those glorious years was called National Steel Corporation ( my alma mater), all facilities are in shutdown. They have implemented a 5 day work week and soon, will resort to forced leaves or even lay-offs. Here in Manila, contractual workers will surely be the first to go.

The sad thing is nobody knows when the situation will improve.