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Commodities start to feel the pinch of the worldwide slowdown

News that Europe's second-largest steelmaker Corus is set to extend steel production cuts beyond the original date of December has caused some consternation in the commodities market. The company has confirmed plans to reduce production by around 30% during the next two quarters and then reassess the situation in the early part of 2009.

Companies such as Corus have been hit hard by the slowdown in countries such as China and India which were demanding enormous amounts of steel to supply their ever-growing building programs. This collapse in demand has seen production cuts across the board and many cost saving measures put in place. We are now seeing some blast furnaces taken off-line completely which is obviously of concern to the workforce.

The commodities market offers a great insight into the worldwide economy and is often used as a barometer for the immediate future. Orders for commodities such as steel are often placed months in advance therefore the supply line figures can offer an interesting early alarm system. Many experts expect to see a number of similar announcements in the commodity markets as the reality that the worldwide economy is slowing down continues to hit home.

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