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Global steel long-term outlook Q1 2017

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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.

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

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  • Document

    Global steel long-term outlook Q1 2017

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    Global steel long-term outlook Q1 2017

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  • Document

    Executive summary

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  • Document

    Market structure

    PDF 642.67 KB

  • Document

    Costs

    PDF 120.75 KB

  • Document

    Prices

    PDF 108.06 KB

Table of contents

  • Executive summary
  • Market structure
  • Costs
  • Prices

Tables and charts

This report includes 51 images and tables including:

Images

  • 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
  • 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

Tables

  • Key China forecast data

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