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[Lavanay]

Globally, firm consumption trends in Brazil, Russia, India, China and the Middle East are cancelling weakness in the America. The stage is set for steel price increments in most markets in 2008.

Fitch anticipates the US economy to stay out of a recession in spite of continued weakness in residential construction and rising weakness in consumption. More credit tightness that results in cutting nonresidential construction or manufacturing expenditures would reduce America's demand for steel. Steel requirement in the United States has been soft, with prices presently supported by low shipments and low stocks, as well as reduced imports. The US dollar may weaken with more interest rate cuts. Given the weak dollar, coupled with high freight rates, the US market will become fairly isolated. Europe, with the strong euro, will likely be the favored destination for exports.

In India we recommend JSW Steel, Tata Steel, Godawri Power and KIC Metallics. (In the order of preference)