Bloomberg reported that Nomura Holdings Inc has initiated coverage of Europe' steel industry with a bullish view and said prices will beat market predictions because of higher production costs in China.
Mr Paul Cliff analyst in London said that "The market has underestimated the potential for steel prices to move much higher in the second half of 2009 and 2010." He added that a recovery in demand will outpace increased use of production capacity. Demand in China is robust, with the outlook for construction in the country remaining strong.
Mr Cliff also recommended buying shares in ThyssenKrupp AG as it should be an early beneficiary of rising steel and iron ore spot prices. He rated Germany’s Salzgitter AG a buy and recommended investors reduce their holdings in Sweden’s SSAB Svenskt Staal AB and Austria’s Voestalpine AG.
Nomura Holdings said that Chinese steel demand will grow 15.6% in 2009 and 10.6% in 2010. Global demand is expected to increase 12.2% in 2010 after declining 10.3% in 2009.
Nomura Holdings also gave 'buy' recommendations on Japan’s Nippon Steel Corporation, South Korea’s POSCO, India’s TATA Steel Limited, China’s Maanshan Iron & Steel Co and Russian steelmakers Evraz Group SA and OAO Severstal.