Prospering Corus warns of price increases

Steel prices will continue to rise this year, claimed Corus today as it announced a second consecutive year of profit.

High global demand for steel and continuing high prices have ensured Corus made profit before restructuring and disposals of £1bn in 2005, compared to £934m the previous year.

Turnover in 2005 reached £10.1bn, compared to £9.3bn in 2004.

Massive global demand, particularly from the emerging Chinese economy have over the last two years led to unprecedented price increases. The company said it expects high demand and low stock levels to push prices up further this year. Corus said: “Beyond the first quarter of 2006 it is expected that global growth in steel demand, underpinned by China, will remain strong. In Europe, a recovery in underlying demand, combined with inventory levels at or below trend, provide the basis for improved selling prices from the second quarter.”

Corus said it is feeling the pinch from high gas and electricity prices. The company said UK energy costs increased compared to other European countries, and it expects to pay an extra £20m in the first quarter of this year. Corus said its Long Products Division will especially be hit.

Corus also said it will sell its aluminium rolled products and extrusions business for £570m. The company has signed a letter of intent with Aleris International, which also includes Corus’s stakes in its Canadian and Chinese joint ventures.

Corus said it intends to develop its carbon steel business.