Commodity market report

Global steel long-term outlook Q1 2015

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Report summary

For 2015 and beyond the steel world will need to contend with two major structural changes namely the key emerging markets' growth rates growing more akin to the mature economies and much lower raw materials costs across the industry. As the year has commenced signs of weakness have continued to envelop steel markets with prices falling in all key regions utilization rates trending downwards and global crude steel production falling in year on year terms.

What's included

This report contains

  • Document

    SMS LT Q1 2015(V3.2).xls

    XLS 2.29 MB

  • Document

    Global steel long-term outlook Q1 2015

    PDF 902.33 KB

  • Document

    Global steel long-term outlook Q1 2015

    ZIP 1.63 MB

  • Document

    Executive summary

    PDF 82.46 KB

  • Document

    Market structure

    PDF 709.88 KB

  • Document

    Costs

    PDF 86.37 KB

  • Document

    Prices

    PDF 91.35 KB

Table of contents

  • Executive summary
      • Summary
        • Other key changes to our demand outlook:
        • Construction – residential property has peaked while non-residential will see further growth
        • Construction – infrastructure to gain strong growth in the medium term
        • Manufacturing sector
        • Imports
        • Exports
      • Production
        • Overcapacity hampering steel mill profits
        • Environmental legislation playing a bigger role in capacity closures
        • Qualifying the steel mills
        • Total capacity to stay above 1.2bln tpa in the long term
        • Industry concentration to rise
        • Hot metal production remains under-reported
        • Scrap is a long-term threat to hot metal
        • Japan
        • South Korea
        • Taiwan
          • Significant growth potential
          • Strong government is not a magic pill!
          • Steel demand to grow but moderately
          • Where will the steel come from?
          • India remains a difficult place to bring on new steelmaking capacity
        • Vietnam
        • Indonesia
        • Malaysia
        • Thailand
        • Philippines
          • Smaller but not worse
          • In the medium term exports remain key to steady steel demand…
          • … and to steel production growth
        • Other Europe
          • The reversal of the stock cycle and falling demand from the oil and gas sector will drag on growth
          • Imports will remain high
          • Demand to grow in the long term, but not across all sectors
          • Production and capacity shifting towards EAFs
          • Growth will depend on the automotive sector
          • Steel production will rise
          • Outlook remains weak
          • The investigation into corruption claims has brought growth to a standstill
          • A quick resolution to the crisis is essential for growth
          • Domestic producers are increasingly export dependent
          • New capacity is difficult to bring on-stream
          • Weak growth for the rest of South and Central America
          • Demand to fall further this year
          • The current crisis will have knock-on effects for years to come
          • Steel production supported by exports
          • Situation remains difficult
          • Demand constrained by geopolitical tension and low oil prices
          • Construction is and will remain the most important sector
          • Instability undermines growth, especially in the non-construction sectors
          • Investment in new capacity continues albeit at a slower pace
        • Other Africa
    • 2015 follows where 2014 led
    • Iron ore and coking coal prices - lower for longer
    • Scrap prices - playing catch up
    • Forecast outlook

Tables and charts

This report includes 42 images and tables including:

Images

  • The costs of key steelmaking raw materials will continue to fall in 2015 and 2016
  • Scrap prices still have to adjust to return to a more normal relation to rebar and scrap
  • HR coil prices are expected to fall in all regions this year and remain weak in the medium term
  • Longer term prices for HR coil and rebar have been revised down significantly due to a lower cost base
  • Demand growth will underpin further increases in steel production
  • Domestic trade is attributed to regional steel intensity
  • Chinese steel production capacity by region
  • Hot metal cost fell more aggressively making scrap unattractive for steelmakers
  • China's scrap availability to reach 310 Mt in 2035
  • China's steel demand growth is slowing because of economic deceleration
  • Non-residential construction to be a strong driver
  • Social housing construction provides little support to steel demand growth
  • Steel exports are expected to reach ~120Mt in the long term
  • Chinese steel exports by destination (% share) 2014
  • Hot metal production and scrap consumption
  • Steel consumption in the construction sector will remain volatile in the medium term
  • Long term investment in capacity in areas close to fast growing demand could threaten Japan's share of global trade
  • Steel consumption is expected to rise in the Balkans as the region resolves its economic stagnation
  • Crude steel production will remain insufficient to satisfy regional demand in the medium and long term, attracting imports
  • Demand growth remains unstable and feeble
  • South African production stagnant in the medium term
  • Last year apparent steel demand exceeded underlying sector growth
  • Underlying steel demand to grow by 6.7% this year
  • 2012 steel consumption falls were primarily driven by construction
  • Long term, productivity gains will protect manufacturing relative to construction, the main risk will become the EU's ability to export
  • Steel consumption in the construction sector will remain volatile in the medium term
  • 2015 crude steel production will be supported by domestic consumption, more than rising exports
  • Destocking will drag on growth in 2015
  • Imports will remain high in 2015 attracted by a persistently high price premium
  • In the long term automotive and construction sector demand diverges
  • EAF share of steelmaking will rise as it offers more flexible production options
  • Demand outlook has been revised down significantly
  • Steel exports will continue to support production
  • Automotive production will decline further this year
  • The Russian rouble is highly correlated with oil prices
  • Construction will remain the key driver of demand
  • Low income per capita in North Africa and violence in the Levant limit the growth in the construction sector, despite bullish long term drivers
  • Gas allocation difficulties will slow down DRI capacity expansions
  • Despite investments and production growth, the region as a whole will remain a net importer

Tables

  • Key China forecast data
  • Steel, hot metal production and scrap demand
  • Selected 2015-16 budget plans that will support steel demand

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