Zeev's Turnips Patch-No Politics (ZEEV)

[Dr Stoxx]

Steel Sector downgrade details

As mentioned at 8:04 Credit Suisse downgraded the Steel sector to Underweight from Market Weight. The firm says Steel markets are getting tough in the US and problems look about to arise in Europe. The firm says there does not appear to be much the Western steel companies can do about it. The firm says the risk appetite is so high that the risk points are being largely ignored by the market. The firm says US destocking is likely to be as heavy as it was in 2005. Even with production cuts, they say imports are still high and the ISM suggests weaker real demand. The European steel market looks fine for now but the firm says it will likely see problems in 3-6 months. Inventory is rising but most importantly having seen prices equalize with the US, the firm says Europe is already seeing major tonnage of imports entering.