BRITAIN’S official food watchdog will next week consider whether folic acid should be routinely added to flour to reduce birth defects such as spina bifida.

Adding folic acid to bread via wheat flour would help cut neural tube defects (NTDs), according to scientific research.

The Food Standards Agency’s board is set to consider independent advice on whether to support mandatory fortification of white and brown wheat flour.

Up to 900 pregnancies in the UK each year are affected by spina bifida and other NTDs.

The meeting follows a long debate about the pros and cons of routinely adding folic acid - a synthetic form of the B vitamin folate - to flour. The Scientific Advisory Committee on Nutrition (SACN) has recommended the measure be taken up.

The FSA will look at whether products containing folic acid at “nutritionally significant” levels should say so on labels. New controls would also be needed on the voluntary addition of folic acid to breakfast cereals and low-fat spreads and on the use of folic acid supplements.

Papers published yesterday - which will be presented to the FSA’s board - suggested “the incidence of NTD-affected pregnancies in the UK is likely to be reduced if mandatory fortification of wheat flour with folic acid is introduced”.

Wholemeal flour would be exempt from fortification to give consumers more choice.

Between 700 and 900 pregnancies are affected by NTDs every year, with most diagnosed women opting for abortions.

The FSA already advises women to ingest extra folic acid when trying to get pregnant.

However, this is ineffective because around half of pregnancies are unplanned. Mandatory fortification has already been introduced in the US, Canada and Chile, where it cut NTD rates by 27-50 per cent.

A panel of UK scientific experts last year came out in favour of mandatory fortification.

SACN said the measure should be brought in with controls on voluntary fortification, advice on the use of supplements and long-term monitoring.

An FSA consultation on the issue drew 202 responses from industry, consumer groups and individuals.

The baking industry raised “practical concerns” over the move, as bread-making flour couldn’t easily be separated from other flours in mills.

The FSA board will make a decision decide on the issue on Thursday.

If it backs mandatory fortification, it will recommend the move to health ministers, who will have the final say.

Talk about molten steel.

Driven by strong global demand and rising steel prices, steel company profitability is at an all-time high and stocks have become red-hot in a frenzy of takeover talks.

Industry giant Mittal Steel bought No. 2 Arcelor for $35 billion after a six-month hostile takeover battle, forming ArcelorMittal. () Chaparral Steel, () a U.S. structural steel maker, announced a possible sale. Sweden’s SSAB made a $7.7 billion bid for the U.S.’ largest steel plate maker Ipsco () (it has agreed to be bought). And U.S. Steel () snapped up Lone Star Technologies. ()

It seems that every other week some steel producer bids for a rival and pushes the target’s stock up.

“Anything is possible in steel,” said analyst Randy Cousins of BMO Capital Markets. “It’s impossible to lose money in the steel business now, and this is the best market since the dawn of time.”

Why is this paragon of “old economy” industry growing so fast now?

Strong demand in Europe, Asia and South America spurred growth. Russia has seen a surge in demand from renewed industrialization. Consolidation has helped companies reach bigger markets faster and hedge on raw materials.

China became the single biggest net exporter of steel last year with 33 million tons. Chinese steel capacity increased by 200 million tons from 2003 to 2006. That increase alone is double the size of the entire U.S. steel industry, says Andrew Sharkey, president of the American Iron and Steel Institute.

If you think China’s steel quality is low, you are behind the times, says analyst Charles Bradford of Bradford Research.

“They are buying world-class facilities from Japan and Germany,” he said. “China is shifting from lower-end products to high-end products just like Japanese automakers that started selling the Lexus to the U.S.”

But China is not a low-cost place to make steel, Sharkey argues. Even though Chinese labor costs are low, China has to import a key ingredient, iron ore, and electricity costs are high, he says.

What about the U.S. market?

“From the demand perspective, it is significantly weaker compared to the rest of the world,” said analyst Mark Parr of KeyBanc Capital Markets.

The auto and housing slumps have hit volume. Bradford says the current high steel prices in the U.S. are driven by costs, not demand.

For foreign competitors, the U.S. is not an attractive export market due to the weak dollar, says David MacGregor of Longbow Research. “You can do better selling steel to European countries” he said.

1. Business

Steel is a mature, cyclical commodity business. Economic booms boost demand, and recessions slash it. For a commodity business, “the single most important variable is the price,” said Cousins, the BMO analyst.

What makes a successful steel maker? As the current consolidation rush suggests, size matters.

Buying competitors is often more cost-effective than building new plants. It can take three years to build a new mill from scratch, and by then the economy could be in a downturn, says analyst Robert Kelly of Sidoti.

If a company owns plants in several regions of the world, it is easier to cut production to adjust to demand. Being a global player also lets companies negotiate prices with customers.

“If you are a small producer you’ll cut price, but cutting prices doesn’t increase demand,” Bradford said.

Name Of The Game: Shift production volume quickly as demand fluctuates. Globalize business and diversify products, or focus on a unique niche.

2. Market

The biggest customer for steel producers is the nonresidential construction industry, which accounts for about 35% of sales. Second is the automotive industry, which makes up about 25%.

Housing woes are weakening the U.S. market, but the nonresidential construction market office buildings, hospitals, bridges and the like remains strong.

Structural steel makers such as Chaparral, Steel Dynamics () and Nucor () are enjoying a springtime free of price competition.

As Sidoti’s Kelly explains: “They don’t have to worry about Chinese competitors because domestic producers don’t have enough capacity to supply all the demand.”

Despite the housing slump, demand for steel roofs for residential homes is rising. When hurricanes Katrina and Rita destroyed 740,000 roofs in the Gulf Coast region, steel makers formed the Gulf Coast Steel Initiative and started rebuilding homes and re-roofing using steel roofs.

“Metal roofs are three times stronger than asphalt,” said Natasha Yamaoka of ArcelorMittal, a member of the Gulf Coast initiative. The metal roofing market share has more than doubled to 8% of the national steel market, or about 800,000 tons.

3. Climate

What’s driving foreign steel makers to sweep the continents?

“They need geographic diversification,” Cousins said. “Indian companies want to be in Europe or North America, or European companies and Brazilians think they have to have a North American footprint.”

He says Ipsco’s profitability, leadership in oil countries and ties to the energy sector made the firm an attractive target. Ipsco’s stock has risen nearly 50% this year.

The weak dollar also gives European companies an advantage when shopping for U.S. producers.

When Chaparral announced that it was in acquisition talks, its stock shot up. That made it hard for bidders to bid cheap, Kelly says. But while U.S. rivals may not be able to afford Chaparral, Europeans, Brazilians and Russians may be willing to pay for profitable U.S. assets, Bradford says.

Securing access to raw materials such as iron ore and coal by mergers saves money.

“Mittal bought mills in Kazakhstan because they have raw materials next to the mills,” Bradford said.

The consolidation rush made the ordering system less volatile, Longbow’s MacGregor says.

Before, steel buyers would place duplicate orders with several suppliers; once they got the best deal on one, they canceled the others.

“Now you are down to two to three mills, and it will jeopardize the relationship if you do the same thing,” MacGregor said.

4. Technology

Lighter, stronger, energy-efficient those are the buzzwords for a new generation of steel.

Advanced high-strength steel (AHSS), which is four times stronger than regular steel, was developed for automobiles to achieve better crash-test results without increasing the weight of the car.

Every new vehicle produced by U.S. plants now has advanced high-strength steel, says Jody Shaw, manager of automotive marketing for U.S. Steel, a producer of AHSS.

By using high-strength, low-alloy steel, a vehicle can be 25% lighter than a car that uses traditional steel. Lighter weight boosts a car’s fuel efficiency.

On average, about 12% of the body structure in vehicles is AHSS, Shaw says. A study by Ducker Worldwide sees that figure jumping to 40% by 2015.

AHSS is one of the most profitable products for steel makers, and it’s also the best weapon to compete with steel’s rival, aluminum.

Automakers also use aluminum for vehicle bodies, and aluminum is lighter than steel. But Shaw says steel tops aluminum for two reasons: cost and energy efficiency. He says that since the production process of aluminum creates five to seven times more greenhouse gas, steel beats it in total life-cycle fuel efficiency.

5. Outlook

The big U.S. steel makers AK Steel, () U.S. Steel, Ipsco all beat first-quarter forecasts with strong profits buoyed by rising prices and more shipments.

But U.S. Steel’s second-quarter outlook fell far short of views.

More than half of U.S. Steel’s earnings come from Central Europe. But because of high raw material costs, Central European business is shaping up to be weaker, Bradford says.

Hurt by soft U.S. demand, U.S. Steel and others began to lean on the robust European market. The strong euro works favorably for U.S. companies that do business overseas. But the currency rate could fluctuate and global demand could change.

In 2006, U.S. steel makers exported almost 10 million tons of steel. But Sharkey says that will drop to 9 million this year. Meanwhile, imports are projected to drop slightly in 2007, to 40 million tons.

Still, demand from the nonresidential segment can continue to grow for at least the next five years, Kelly says.

Upside: Demand from U.S. nonresidential construction should continue to grow.

Risks: If the cost of raw materials and scrap continues to go up, production costs will increase. Labor pension costs and currency rates could hurt, too.

NEW YORK—U.S. economic growth should lose steam in coming months, a research group said Thursday, indicating a clampdown on credit markets will continue to take its toll on the broader economy.

The Conference Board said its index of leading economic indicators dropped a sharp 0.6 percent in August, slightly higher than the 0.5 percent fall analysts were expecting. The index rose a revised 0.7 percent in July, after slipping 0.1 percent in June. The erratic pattern reflects the ongoing uncertainty over the impact of the credit crisis on the overall economy.

The Conference Board report is designed to forecast economic activity over the next three to six months.

“Economic growth is likely to continue in the near term, although at a slower pace,” said Ken Goldstein, labor economist for the Conference Board.

For growth to continue, however, Goldstein said there will be two potential hurdles to overcome Д business confidence and the “wealth effect,” which has been hit by falling home prices.

“This loss of household assets, if combined with weak employment growth, could have a negative impact on consumer spending going forward,” Goldstein said.

The Conference Board report tracks 10 economic indicators. Only one of those indicators, real money supply, advanced in August.

The negative components, starting with the largest, were consumer expectations, unemployment claims, stock prices, building permits, vendor performance, manufacturers’ new orders for non-defense capital goods, interest rate spread, and manufacturers’ new orders for consumer goods.

Weekly manufacturing hours held steady.

With the latest report, the cumulative change in the index over the past six months has increased 0.5 percent.

The report was taken before the Federal Reserve’s decision to cut a key interest rate by a half point, a move that sent stocks soaring Tuesday. The bigger-than-expected cut was an effort to ensure the country isn’t pushed into a recession by turbulence in the financial markets.

The credit crisis started with rising defaults in subprime mortgages Д home loans made to people with weak credit histories. Analysts believe these problems, along with declining consumer confidence, could lead to a recession.

Also on Thursday, the Labor Department said jobless claims declined last week by 9,000, the lowest level in seven weeks. Analysts were expecting a slight rise in claims.

Stocks dipped Thursday following weaker-than-expected earnings at Bear Stearns and caution ahead of testimony before Congress from Federal Reserve Chairman Ben Bernanke. In prepared remarks, Bernanke said the credit crisis has created “significant market stress” and gave fresh assurances that regulators would step in to curb the fallout.

The Dow slipped 30.24, or 0.22 percent, to 13,785.32.

The Standard & Poor’s 500 index fell 0.24 percent to 1,525.40 and the Nasdaq composite index fell 0.28 percent to 2,659.09.