Will Steel Demand Come Back?

World steel prices have recovered some ground since their nadir last spring, but they're still a far cry from the levels that prevailed during the heady days of summer 2008. With demand ultimately resting on activity in construction, automotive, and machinery markets, a full recovery will likely be drawn out and fraught with uncertainty. Exacerbating this still-weak global demand outlook is surging steel production in China--which places the burden of discipline on other steelmakers' shoulders--and increasing costs for key raw materials.

Background: Steel Production and Uses
China is by far the top steel-producing country, followed by Japan, Russia, the United States, and India.  ArcelorMittal (MT) is the world's largest steelmaker, with 2008 output more than double its closest peer, Nippon Steel. Major end markets for steel include construction, machinery, and autos.