Companhia Siderurgica and Gerdau Under Review: Steel Industry to See Robust Growth in 2013

Feb 08, 2013, 08:00 ET from

LONDON, February 8, 2013 /PRNewswire/ --

2012 was a tough year for the steel industry due to economic uncertainties. However, the improving global economic outlook suggests that the steel industry could see a turnaround. With growth in China accelerating and the housing market in the U.S. continuing to improve, companies such as Companhia Siderurgica Nacional (ADR) (NYSE: SID) and Gerdau SA (ADR) (NYSE: GGB) can expect robust growth in 2013. StockCall technical research on Companhia Siderurgica and Gerdau is currently available for free by signing up at

Steel Demand to be Driven by China

Over the last decade, China has been the biggest driver of growth in the steel industry. The country's demand for steel has been driven by large infrastructure projects. Not surprisingly, the slowdown in the Chinese economy last year had a significant impact on the steel industry.

However, concerns over a hard landing in China have eased. In fact, growth is expected to accelerate in the world's second-largest economy. In the fourth quarter of 2012, the Chinese economy grew more than forecast. With growth picking up in China, the demand for steel for infrastructure and construction projects should see a rebound. This is a good sign for Brazilian companies such as Companhia Siderurgica Nacional and Gerdau. Sign up for the free technical report on  

Rising Construction Spending in the U.S.

Another driver for growth in steel demand in 2013 will be rising construction spending. In the U.S., construction spending has rebounded sharply in the last one year thanks mainly to a recovery in the housing market. Non-residential construction activity in the U.S. is also rising. These trends are likely to continue in 2013. The American Institute of Architects expects spending on non-residential construction to rise 6.2% in 2013.

The weakness in the construction sector following the financial crisis of 2009 had been one of the main factors behind the decline in the steel industry. However, with the sector now recovering, steel industry can expect robust demand in 2013 and beyond.

Growth in Automotive Sector

The automotive sector is one of the biggest consumers of steel. Last year, the automotive sector saw substantial growth and the trend is likely to continue in 2013 as the economic outlook continues to improve. In the U.S., improving consumer confidence, stabilizing labor market and cheap financing are likely to be the key drivers of growth in auto sales. China is also expected to drive growth in the automotive sector.

Europe Improves

The biggest drag on the steel industry in the last two years has been Europe, where demand has fallen sharply due to the debt crisis. Recently, Lakshmi N. Mittal, Chairman and CEO of world's leading integrated steel and mining company, ArcelorMittal, said that demand for steel in Europe fell 8.8% in 2012. However, measures taken by the European Central Bank (ECB) last year have helped in easing concerns over the debt crisis in Europe. Recent data from the euro zone suggests that the region's economy is stabilizing, which is a good sign for steel companies.

What Can Compahia Siderurgica Nacional and Gerdau SA Expect in 2013?

After a tough year, Brazilian steel companies Companhia Siderurgica and Gerdau can expect some robust growth this year. Apart from the factors highlighted above, growth for the Brazilian steel companies will also be driven by investment in infrastructure projects in Brazil. With Brazil hosting the 2014 Football World Cup and the 2016 Summer Olympics, spending on construction projects is expected to remain robust in the next few years, which should benefit Companhia Siderurgica Nacional and Gerdau. Register now and download the free technical analysis on Gerdau at  

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