International credit rating agency Moody's has announced that the outlook for the European steel industry will remain stable until 2015, despite anticipated capacity utilization and profitability improvements.
According to Moody's report, despite anticipated improvements, the agency expects capacity utilization to stay between 75-80 percent, within its range for a stable outlook. Prices are also under pressure with limited scope to increase as overcapacity still runs high, as imports from Asia and the CIS are cheaper and as iron ore prices remain low.
In addition, Moody's noted that the Eurozone Composite Purchasing Manager Index remains within the agency's stable range of between 49-55, despite the improvements. Moody's would consider moving the steel industry outlook to negative if the PMI falls below 49 or positive if the PMI keeps above 55, either occurring for two consecutive quarters.
