A SURGING steel market in China will not increase structural steel prices for UK contractors, according to Anglo-Dutch steelmaker Corus.
At its annual general meeting last week the company confirmed that, although the global consumption of steel is likely to rise by at least 4 per cent during 2005, price increases are unlikely in Europe.
But it will protect the margin on the material it produces by scaling down production at its plants.
It will drop manufacturing output by 70,000 tonnes per month in the second quarter and by 160,000 tonnes per month from the third quarter of the year.
This, it claimed, is due to the weak construction sector, combined with high imports and bulging steel stockpiles leading to downward pressures on selling prices.
But some industry sources claimed the move to scale down production was an effort by the firm to protect its profit margins after the global price of steel rocketed last year on the back of massive demand for the material in China.
Corus revealed a profit for the first time in years because of spiralling prices that saw the cost of structural steel break through the £700-per-tonne mark.
At the AGM the company revealed that it expects its first half of 2005 to be marginally better than the final quarter or 2004 and that it would be expecting to declare a modest initial dividend at its interim results in August.