Moody's raises leveraged steel industry outlook to stable

New York, July 11 - Moody's Investors Service said it is raising its outlook for the leveraged steel industry to stable following the import tariffs imposed in March.

Steel prices are now "dramatically higher" and the U.S. steel sector has recovered somewhat from its lows at the end of last year.

However the rating agency said there are still long-term questions that have not been resolved.

"By any measure, the US steel industry has moved out the bottom of the trough - which was in December 2001 - and is moving to more solid ground," said Moody's senior vice president Steven Oman in a news release "The companies that survived the disastrous downturn should get back to healthier credit ratios."

Oman added that conditions will likely continue strong for the remainder of 2002 but cautioned that prices could already be at their near-term high.

Upgrades in the industry are unlikely because the Section 201 tariffs are temporary, Oman added. In effect, the import duties only delayed action to address major problems such as excess capacity and U.S. pension and healthcare legacy costs.

Therefore, the long-term prospects for the domestic steel industry remained limited, Oman commented.

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