[heavyhaulerss]

Steel is on edge and the global industry is cutting back hard, hanging on for either a budget blast from China, new credit for vast Middle Eastern building schemes or resurrection of the US auto industry.

Demand has dwindled and steelmakers, notably the giant of them all, ArcelorMittal, are damping down surplus furnace capacity while waiting for credit to flow, construction cranes to turn and factories to roll.

A decision by ArcelorMittal last week to pursue temporary production cutbacks, slashing European output by more than half from the end of April according to a union source, dramatises the extraordinary ride and role of steel in the last few years.

In just months the global industry has gone from a boom driven largely by China, emerging markets and a property extravaganza in the Middle East to a narrow line between excess capacity and the costs of waiting for recovery.

"Over the past six months, demand for steel has dropped dramatically and, as a result, producers have been cutting production," analysts at Barclays Capital said in a study last week.

In another report, Morgan Stanley predicted "the current demand shock to lead to excess steel capacity."

Consequently, the bank said, steel plants should operate at rates below 75 percent of capacity until 2012.

"The steel market is not very different from base metals as a whole, but steel has reacted more rapidly and dramatically since September," said commodities analyst Perrine Faye of London-based FastMarkets.

She said the future of the steel industry depended on three factors -- the impact of Chinese economic stimulus efforts, a pick-up in the Middle East construction sector and a revival of the once mighty US auto industry.

"Chinese imports and exports are at a standstill. Everyone is waiting for the Chinese stimulus package to see if it will revive demand."

The Chinese government last month announced a four-trillion-yuan (580-billion-dollar) package of measures that it said could contribute 1.5 to 1.9 percent to the country's economic growth.

Industry experts have meanwhile spoken optimistically of China's prospects.

Thomas Albanese, chief executive at steel maker Rio Tinto, said earlier this year that the company foresaw "a short, sharp slowdown in China, with demand rebounding over the course of 2009, as the fundamentals of Chinese economic growth remain sound."

Analysts have said steel inventories are falling in China in anticipation of projects expected to emerge from the country's huge stimulus package.

"It is encouraging that the inventory of steel products, especially long products, which are mostly used in construction projects, have started to fall (since the end of March), likely suggesting that end-demand is gathering momentum," Frank Gong, a Hong Kong-based economist for JPMorgan, wrote in a research note.

On-the-ground evidence suggested that the Chinese industry had been re-stocking in the first two months of the year, followed by a pause in March before major infrastructure projects were expected to start in the second quarter, Gong wrote.

In the Middle East, according to Faye, the big problem is a shortage of credit, notably for real estate developers and builders.

Construction planners had "counted on a higher price for oil and on credit to finance their huge projects."

In addition, demand for such facilities, especially in the Gulf, has died.

"They were hoping that Americans and Europeans would buy apartments. But property prices have collapsed in the Middle East as well."

In the United Arab Emirates more than half the building projects, worth 582 billion dollars or 45 per cent of the total value of the construction sector, have been put on hold, a study by Dubai-based market research group Proleads found in February.

In Dubai, one of the states of the UAE, prices in the real estate sector have slumped by an average of 25 percent from their peak in September after rallying 79 percent in the 18 months to July 2008, according to Morgan Stanley.

Faye said the fate of the steel sector was in addition tied to that of the struggling US auto industry, once a thriving steel market but one in which two of its giant players, General Motors and Chrysler, are staring at bankruptcy.

The two companies are currently limping along thanks to billions of dollars in government aid.

"We are waiting to see if the auto sector in the US will get out of the crisis intact," she said.

[GMAN]

It appears from this article that it is going to be a slow recovery or perhaps could get worse before things begin to improve.

[heavyhaulerss]

It appears from this article that it is going to be a slow recovery or perhaps could get worse before things begin to improve.

It does look that way. this article is new. 4/09/09 I think it is going to be a unpredictable future for truckers. especially flatbed haulers.

[dropdecks]

those flats will only branch out into equipment hauling and drive down the rates in that sector. In fact they already have.

[heavyhaulerss]

I kinda hope rates get so low so fast that it will drive out the one's who take the low rates. I am refering to my area. we have rate cutters that have cut rates down to where they cannot run for long & afford to keep the trucks up. but they do it for a while & then they leave & go & cut the rates somewhere else. I dont want ot sound mean,. but some of these folks are like leeches. after they run the cut rates for a short while & cannot make it they will not keep hauling it, but by then they already ruined it for others who wanted to keep the rates at a level where it is profitable. I am down on earnings by a large amount . I still will not haul cheap freight.

[GMAN]

Once a broker or shipper finds that an owner operator or carrier will haul for a cheap rate they will try to move that load to others for the same low rate. The only thing that has been keeping us running is some seasonal freight we do. Rates are down but higher than anything else that I have seen. I won't put anything on my trucks that I can't make a profit on. I would rather deadhead out than haul for free.