Commodity Market Report

Global steel long-term outlook Q1 2017

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04 April 2017

Global steel long-term outlook Q1 2017

Report summary

In 2017 the steel industry hit the ground running, with demand, production and prices on the up in China, Europe and the USA. Overall we expect this to be a year of recovery. Global finished steel demand is expected to grow 2.2%, to 1.52 billion tonnes. Brazil and Russia are past the worst, manufacturing remains strong in Europe, the stock cycle will be expansionary in the USA and China, and higher oil prices will lift steel demand in oil-dependent economies, most notably in the Middle East.An important 2017 development is the expected rise of global utilisation rates after a four-year decline. China will cut another 50 Mtpa of capacity in 2017. At the same time, protectionist measures will undermine export opportunities for Chinese steelmakers. This should allow steelmakers in most regions to increase output and utilisation rates. Crude steel production is expected to expand by 1.6% globally and by 3% ex-China.

Why buy this report?

The global steel industry is showing signs of recovery with growing demand for finished steel, and crude steel production expected to increase in 2017. Our report will help you to:

  • Identify the primary drivers influencing trade and price dynamics using our deep market knowledge and forecasts of market fundamentals
  • Guide your corporate strategy using our comprehensive research of steel supply and demand dynamics
  • Form a long term view of steel market trends and contrast with your own models

Our report provides a detailed view of the supply and demand side drivers for the steel market globally for the next 20 years. It includes:

  • Key forecast data for China, covering production, consumption and capacity
  • Visual analysis of demand drivers by country and region, with a focus on China
  • Data on global production trends, as well as export and import patterns

Table of contents

  • Executive summary
  • Market structure
    • Summary
    • Demand
      • Property construction: 2016 non-res weakness will have lasting consequences
      • Government will continue to stimulate growth in infrastructure
      • Manufacturing: government stimulus will support medium-term growth
    • Production and exports
      • Unreported steel production excluded from our crude steel production
      • Production undermined by weak demand in the medium term
    • Pollution and capacity controls
      • New environmental regulations will impact winter steel production
      • Cutting capacity will get tougher this year
    • Hot metal and scrap
      • Scrap’s share in crude steel production won’t get near 2020 target
      • 2010-2016 hot metal production revised
      • Hot metal production will see another peak in 2017
      • Japan
        • Demand in the construction sector will recover in 2017
        • Manufacturing demand will be undermined by contracting automotive production in the medium term
      • South Korea
      • Taiwan
      • India
        • India: still not there
        • The construction sector: stubbornly low expectations
        • Crude steel production growth set for a slowdown
      • Malaysia
      • Indonesia
      • Thailand
      • Vietnam
      • Philippines
      • Europe
        • Construction
        • Automotive
        • All other sectors
        • Production
        • Prices
      • Turkey
        • Construction
        • Automotive and machinery
        • Household appliances
        • Trade
        • Production
      • Other Europe
        • Steel demand growth will benefit from oil
        • Steel production faces competition from imports
      • Middle East and North Africa
        • Oil price recovery will lead to higher steel demand
        • with upside potential for steel demand growth
        • Steel consumption set to rise, but do not believe the hype
        • Metallics: the key risk to steel production growth
      • Brazil
        • Construction
        • Automotive and Machinery
        • Household appliances
        • Shipbuilding
        • Trade
        • Production
      • United States
        • 2016 – sheltered yet subdued
        • 'Trump effect' or not, could 2017 be the turning point?
        • Construction to propel growth over long term
        • Production to recover from recent lows
      • Mexico
        • Uncertainty around automotive prospects
      • Canada
      • Other South and Central America
        • Steel demand growth starts now
        • Production growth – but from a low base
      • Russia
        • The decline is ending
        • Construction
        • Automotive and machinery sectors to grow in the long term
        • Shipbuilding
        • Household appliances
        • Overall steel demand will grow, but slowly
        • Steel production supported by exports
        • Short and long term capacity expansion expected
      • Africa
        • Demand growth remains too low
        • Crude steel production sees some investment
    • High prices will lure supply glut
    • Costs will stay low in the medium term
    • Scrap prices will be higher but falling in 2017
  • Prices

Tables and charts

This report includes 51 images and tables including:

  • Industry reorganisation will see utilisation rates soar in China
  • Supporting a strong medium-term price recovery
  • The weakness of construction relative to manufacturing will result in a slower medium-term recovery for rebar
  • EU sluggish growth and relative openness to trade will result is relatively small premia over Chinese products
  • Key China forecast data
  • Demand revision in Q1 2017 update
  • Iron ore exports
  • EU hot metal costs and scrap price forecast
  • Turkish scrap consumption by origin
  • EU scrap prices vs Turkish scrap imports
  • The government will continue to stimulate demand in the infrastructure sector in the medium term
  • however, the property sector will keep declining
  • Steel demand in manufacturing was revised up in the medium term
  • Demand in automotive will increase the fastest among all major steel-consuming sectors
  • Exports will recover in the long term
  • A weaker demand outlook caused a revision to our long-term production forecast
  • The '2+26 policy' will impact steel production during China’s heating season (mid-November to mid-March)
  • Capacity cuts will cause utilisation rates to rise in the medium term
  • Scrap usage in steelmaking will gradually rise in the medium term
  • Hot metal production will decline after 2017, once the government has removed all illegal induction furnaces
  • Demand in Vietnam has been revised up significantly
  • Production will increase, and force steel imports to decline in the medium term
  • Demand in the construction sector will peak in 2017
  • Weak automotive sector is the main driver of declining demand in the long term
  • Weak exports will further undermine steel production
  • Japan needs to cut more capacity
  • India's potential remains awesome, but the track record in execution demands caution
  • Liberalisation has attracted FDI, but growth is barely enough to buffer the effects of fading credit availability
  • Protectionism alone could have not done it. Support to margins came also from a stronger global price environment
  • Upside risks exist to our production forecast in the medium term. In the long term, government targets remain overly optimistic
  • Automotive demand is booming with a rise in non-EU imports, internal EU trade and a drop in exports
  • new passenger car registrations show that growth is (almost) universal across the block, with Eastern European countries displaying the most robust growth
  • Automotive production will rise as wealth increases and the working age population grows
  • Turkish exporters face increasing competition in their traditional export markets
  • The mature economies remain the main drivers of steel demand
  • Medium term growth potential for crude steel production, but import competition remains strong
  • Oil price recovery will spark a steel demand rebound in 2017
  • The worse is over in Saudi and elections and oil price increases should get Iran out of stagnation
  • Government investment is expected to increase in 2017. The payment of arrears injected confidence in the construction sector
  • Investment is expected to strengthen in the coming years
  • Iran is well placed to expand production in the medium term, just not at the breakneck speed that the government expects
  • Rising demand and falling global exports should allow MENA producers to increase painfully low utilisation rates
  • Iran will contribute most of DRI production growth
  • The rest of the region will have to increase its scrap consumption above historic peak
  • After three years of contraction, Brazilian steel demand hit a trough in 2016. But growth will return to all sectors this year
  • The automotive sector will be the strongest performing sector over the next five years, with passenger vehicle growth leading the charge
  • Steel stocks at service centres are at very low levels as we have started 2017
  • Despite jumps in the price premia, protectionist measures have kept imports low
  • After a tough couple of years, US steel demand should return to positive territory over the medium term
  • Russian producers have looked to the export market as domestic demand stagnated
  • long products' exports to MENA and volumes to the EU have increased year-on-year

What's included

This report contains:

  • Document

    Global steel long-term outlook Q1 2017(V2.2).xls

    XLS 2.37 MB

  • Document

    Global steel long-term outlook Q1 2017

    PDF 861.10 KB

  • Document

    Global steel long-term outlook Q1 2017

    ZIP 1.68 MB

  • Document

    Executive summary

    PDF 78.93 KB

  • Document

    Market structure

    PDF 642.67 KB

  • Document

    Costs

    PDF 120.75 KB

  • Document

    Prices

    PDF 108.06 KB

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