14 November 2008
Johannesburg — HOW the mighty have fallen. Steel makers have been riding the crest of enthusiastic expansion in China and India, but also at home.
It seemed as if the good times, which have been rolling for an unprecedented six years, would never end. They just have, as the turmoil in global financial markets spilled over into the real economy.
The notoriously cyclical steel industry has seen the effects immediately.
As steel makers at home - Arcelor Mittal SA last week and Highveld Steel this week - posted record results in their respective third quarters, both announced significant cut s in production.
This as international and local demand for luxury white goods and motor vehicles has taken a dive and prospects for construction turn tardy.
Both companies' stocks have tumbled from their lofty highs of several months ago.
Granted, short to medium term prospects are dismal, but the stocks are trading at dirt cheap price:earnings ratios of 3,49 and 2,96 respectively.
The Bottom Line is Edited By Edward West
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