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Global steel long-term outlook Q3 2016

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Report summary

2016 is shaping up to be a better year for steel than we had expected. The secret of its success? As ever China. Trapped between the immediate need of reviving a slowing economy and the structural necessity of reforming excess capacity in the steel sector the Chinese government ended up stimulating the construction sector. As a result steel prices shot up in China from US$270/tonne in December 2015 to US$400/tonne in April.Prices have since retracted and between sluggish demand growth and lingering overcapacity we expect them to remain practically flat in the medium term. It is only in the long term that we expect demand growth and costs structure to support a sustainable price recovery.

What's included

This report contains

  • Document

    Global steel long-term outlook Q3 2016.xls

    XLS 2.36 MB

  • Document

    Global steel long-term outlook Q3 2016

    PDF 918.05 KB

  • Document

    Global steel long-term outlook Q3 2016

    ZIP 1.72 MB

  • Document

    Executive summary

    PDF 83.98 KB

  • Document

    Market structure

    PDF 704.17 KB

  • Document

    Costs

    PDF 103.70 KB

  • Document

    Prices

    PDF 115.05 KB

Table of contents

  • Executive summary
  • Market structure
  • Costs
  • Prices

Tables and charts

This report includes 57 images and tables including:

Images

  • Market structure: Image 18
  • Market structure: Image 19
  • Hot metal production and shares of BOF and EAF steel production
  • Both automotive production and exports will decline…
  • ...Demand in other major end-use sectors will also decrease in the long term
  • Japan needs extra capacity cuts in the forecast period to maintain typical utilisation rates
  • Steel demand is highly dependant on investment
  • Growth in the construction industry has slowed
  • Steel demand – increase in consumption 2016-2035, Mt
  • Steel capacity – increase between 2016-2035 including not-committed-to expansions, Mt
  • Cars in Romania: room to grow, but growth will be slow
  • A decreasing population and increasing age of cars limits auto growth
  • Market structure: Image 22
  • Market structure: Image 23
  • Cars in Turkey: room to grow with low vehicle ownership and a growing population
  • Households with sufficient income to own a car will increase at a faster rate than the working age population.
  • Scrap/billet spreads: EAF based mills will continue to take advantage of the most economical source
  • Finished steel imports to Turkey have increased year to date particularly from South Korea
  • Rest of Europe steel imports remain high
  • Rest of Europe steel production to decline in 2016
  • MENA steel demand growth and armed conflict
  • Iran steel import dependency declines
  • GCC and peers: per-capita steel in construction
  • Saudi and other GCC steel consumption outlook
  • North Africa steel demand by sector
  • North Africa long-term demand drivers
  • MENA DRI capacity expansions likelihood
  • MENA implied scrap requirements
  • Stocks have finally started to rise
  • Demand will improve in H2 2016
  • Reversal of the stock cycle will support apparent demand in H2 2016 and 2017
  • In the long term, we forecast falling automotive demand and a healthy growth in construction
  • Utilisation will reach a nadir in 2016, correlating with the output of the three largest South American producers
  • Although still in decline, 2016's contractions in vehicle production and industrial production are less than in 2015. Growth is expected in 2017.
  • Steel production is supported by exports
  • Despite widespread trade cases, finished steel exports continued to rise in 2016
  • Subdued steel demand growth – particularly in the larger consuming countries
  • Crude steel production: revised down
  • US HR coil premium
  • EU HR coil premium
  • Total building completion revised up in the medium term but down in the long term
  • Wealthier households will promote car demand in the future
  • Western regions will lead the increase in car penetration in the long term
  • Changes to crude steel capacity, 2010-2020
  • Changes to hot metal capacity, 2010-2020
  • Crude steel capacity cut by provinces, 2016
  • Hot metal capacity cut by provinces, 2016
  • China's steel exports will increase in the long term…
  • ...supporting crude steel production accordingly
  • Scrap prices and hot metal costs
  • Turkey scrap consumption by origin
  • Chinese rebar prices to remain volatile
  • US and EU HR coil prices benefited from AD duties

Tables

  • Key China forecast data
  • China's new long-term plan for railway construction
  • Provincial capacity-cutting targets in 2016 and the medium term
  • Costs: Table 1

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