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Global steel long-term outlook Q1 2018

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29 March 2018

Global steel long-term outlook Q1 2018

Report summary

Our long-term steel demand view remains largely unchanged – but changes to our view of supply and trade mean that we are more bullish on prices. In 2018, we forecast hot-rolled coil at US$904/tonne in the US and US$624/tonne in China. We believe that from 2020 onwards, strong margins will incentivise a return of production and new capacity additions, and together with cost pressures will see prices ease over the medium term. For the longer term steel developments, there are two main themes that have come to the forefront as part of this update – infrastructure investment and global trade disputes. Our flat product pricing outlook has now been further enhanced by new models on flat-product supply-demand balances. You can find these for China, Europe, USA and Brazil in the downloads section of the report. 

Table of contents

  • Executive summary
  • Market structure
    • Key China forecast data
    • Why are we not more optimistic about steel demand growth in lower-tier cities?
    • And why are we not more pessimistic about growth in higher-tier cities?
    • The equipment replacement cycle has run its course
    • Mining and construction growth will not support demand for yellow goods
    • Tax cuts for car purchases ended in 2018
    • 2017: higher costs did not discriminate across technologies, they will in 2018
      • BOF will retake some advantage
        • Iron ore price under pressure from ever growing oversupply
        • Supply uncertainties have prolonged the ride for coal prices. A decline should be imminent.
      • Hot-metal production costs under heighten regulatory risk
    • Scrap prices will be supported by strong steel demand
  • Prices

Tables and charts

This report includes 37 images and tables including:

  • Chart 1: a measure of overcapacity
  • Chart 2: Global steel trade balance
  • Long-term hot-rolled coil prices
  • Long-term rebar prices
  • Prices: Table 1
  • Prices: Table 2
  • Market structure: Table 1
  • Steel demand in construction to rise until 2020
  • After 2020 demand growth in social facilities won't offset the property sector decline
  • Machinery high demand was due to replacement
  • Most incentives will disappear in 2018
  • BOF route will remain dominant in producing more than 85% of Chinese crude steel output
  • Hebei steel capacity will increase after 2020
  • 2017 high demand growth will not be repeated
  • Infrastructure will decline in the long term
  • We forecast steel exports to recover in the medium term
  • The capacity cuts in 2016 and 2017 should continue to maintain current utilisation rate level in future
  • Malaysia will grow fastest among regional peers
  • Southeast Asia steel production will grow steadily
  • Recovery in investment will support steel demand
  • The Indian government deficit has been steadily improving but it still remains high
  • EAF share of production will fall to around 20% by 2035
  • BOF steelmaking will continue to rise steadily and will drive hot metal consumption
  • Market structure: Table 2
  • Saudi production should return to growth in 2018
  • Dependence on DRI continues
  • Market structure: Table 3
  • Demand will take long to recover, but production has already recovered to pre-decline (2013) levels...
  • ...steel production growth has been supported by growth in net-exports
  • Construction will drive long-term steel demand
  • The increase in BF-BOF steelmaking is only a short-term phenomenon
  • Energy infrastructure construction and vehicle output growth will support Russian domestic steel demand.
  • Crude steel production in Russia will trend upward as net exports increase.
  • Chart 1: BOF cost advantage
  • Chart 2: Scrap and hot-metal production costs
  • Scrap prices
  • Costs: Table 2

What's included

This report contains:

  • Document

    Global steel long-term outlook Q1 2018.xls

    XLS 3.08 MB

  • Document

    flat steel products supply demand balances 2018.xlsx

    XLSX 147.54 KB

  • Document

    Global steel long-term outlook Q1 2018

    PDF 669.29 KB

  • Document

    Global steel long-term outlook Q1 2018

    ZIP 1.74 MB

  • Document

    Executive summary

    PDF 94.31 KB

  • Document

    Market structure

    PDF 448.51 KB

  • Document

    Costs

    PDF 123.90 KB

  • Document

    Prices

    PDF 118.46 KB

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