US Steel industry faces a bleak outlook

The slump in the US steel industry may worsen for the next few quarters. In late August, it was reported that US steel producers has rescinded their plans for a September price hike on carbon steel sheet products (go here). Now, these producers are looking into hefty production cutback in the face of slowing demand for their products (go here). Both reports appeared in the American Metal Market's website and were picked up by NakedShorts.

The poor outlook for US steel makers can also be seen in the performance of the US steel index, DJUSST (below). The index, which peaked in May-June 2008 at the 550-560 level, has now broken below the 100-week SMA at the 400 mark. The index closed at 325 mark yesterday, not very far from the strong psychological support of 300.


Chart: DJUSST's weekly chart as at September 11, 2008 (source: Stockcharts.com)

The weakness in US steel may reflect the slowdown in the US & the global economy, which will impact our economy as well as our stock market.