Commodity Market Report

Global steel long-term outlook Q3 2017

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Report summary

That steel prices have been this high in 2017 is awe-inspiring. But is this a blip or the beginning of a trend? In 2017, a couple of exceptional, policy-led developments have played a lead role in the steel-price story. In the first half of the year, the Chinese authorities swiftly wiped out the entire stock of induction-furnace capacity. In the process, statistics underwent monumental revisions, rebasing demand and production curves and hugely inflating growth rates in 2017. Strict and vigorously implemented pollution controls promise to change the winter landscape of Northeast China, curbing coking-coal and hot-metal production. But more support to prices came also from the more mundane, though essential, construction sector, which expanded until June, beating our expectations...

What's included

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  • Document

    Global steel long-term outlook Q3 2017

    PDF 712.08 KB

  • Document

    Global steel long-term outlook Q3 2017

    ZIP 1.55 MB

  • Document

    Global steel long-term outlook Q3 2017(V2.7).xls

    XLS 2.41 MB

  • Document

    Executive summary

    PDF 78.73 KB

  • Document

    Market structure

    PDF 494.42 KB

  • Document

    Costs

    PDF 112.21 KB

  • Document

    Prices

    PDF 105.27 KB

Table of contents

  • Executive summary
      • Key China forecast data
      • Property construction: demand will grow in non-residential property in the medium term
      • Infrastructure construction: government will maintain consistent expansionary policy
      • Manufacturing: main upward revision is from the machinery sector
      • Crude steel production
      • Exports: will continue to decrease in the medium term
      • Scrap: 2017 sees earlier-than-expected shift in scrap usage in China
      • Hot metal: less room for further rises after 2017
          • Japan’s exports will slightly rise in the medium term
          • Production decline will accelerate in the long term
          • South Korea
          • Taiwan
          • Malaysia
          • Indonesia
          • Thailand
          • Vietnam
            • Demand remains lacklustre
            • India's potential is huge, but difficult to fulfil
          • German construction at core of steel demand upturn
          • though Spanish building has shown the biggest recovery
          • High output growth will continue over the next few years
          • Imports will also rise to meet demand
        • Construction
        • Automotive and machinery
        • Household appliances
        • Trade and production
        • Demand struggles to return to growth
        • Manufacturing grows from a slow base
        • Production growth: allowed by China, powered by Iran
        • Diversification remains crucial
    • Construction
    • Automotive and Household Appliances
    • Trade and production
    • Rising stocks confirm an upturn is afoot
    • Demand underpinned by construction
    • despite a continued slide in infrastructure
    • Hurricane Harvey could support automotive demand
    • Construction
    • Steel prices have soared, but it will not last
    • Additional iron ore and coking coal supply will undermine steelmakers' medium-term costs
    • Competition will trim scrap price next year
  • Prices

Tables and charts

This report includes 44 images and tables including:

Tables

  • Market structure: Table 2
  • Market structure: Table 1

Images

  • HRC prices will suffer from sluggish steel demand in automotive
  • Despite the sharp price adjustment expected, steelmakers margins will remain comfortable
  • Long-term HR coil prices
  • Long-term rebar prices
  • Like-for-like demand growth has been more moderate than statistics suggest...
  • Contrary to strong growth rates, like-for-like production growth points to a slight contraction
  • Spending in steel-consuming sectors has risen with the commodity-price upturn
  • Urbanisation is expected to become more steel-intensive, driving construction steel use
  • Market structure: Image 33
  • Large infrastructure projects will keep construction-steel demand growing in the medium term
  • Rising exports will support crude steel output growth
  • Steelmakers have done well from the 2017 price rise
  • Steel price declines and oversupply will force a downward readjustment in iron ore and coking coal prices
  • Turkish scrap consumption soared in 2017, supporting imports and prices
  • Steel demand in construction is set to decline
  • Social facilities and non-residential property will buffer the contraction in residential construction in the medium term
  • Economic reforms and exports will support medium-term growth in steel demand from the machinery sector
  • Medium-term growth in steel demand will be fastest in the automotive sector
  • Exports will continue to move in the opposite direction to Chinese demand...
  • ...declining further in the medium term and growing strongly in the long term
  • Scrap demand has been revised up in the medium term, mainly due to a high base of BOF scrap in 2017
  • Hot metal production soared in response to IF closures. It will stay above 810 Mt in the medium term
  • Following a blip during the failed 2016 coup, demand is recovering to long-term growth
  • Local mills will eventually displace external semis supply
  • A sharp decline in net imports has undermined demand growth in H1 2017
  • Steel prices in Egypt in local currency vs US dollar. Imports are simply unaffordable.
  • Steel-production growth depends on lower global exports
  • Less than 50% of crude-steel-capacity projects are likely to be commissioned
  • DRI production will rise, though only in line with capacity
  • Scrap requirements to increase sharply in the GCC
  • Main upward demand revision is from the automotive sector in our forecast horizon
  • Demand will continue to grow in construction, but will weaken in manufacturing in the medium term
  • We have revised up the export forecast in our Q3 update
  • Crude steel utilisation rate will be lower that 75% after 2024 if no capacity is cut in the long term
  • Market structure: Image 15
  • Crude steel production will rise fast in Southeast Asia during our forecast horizon
  • Minimal construction-sector demand growth in the long term
  • Steel-demand expansion in H1, year-on-year, evenly spread across northern and southern member states
  • Market structure: Image 17
  • Market structure: Image 18
  • Market structure: Image 19
  • Market structure: Image 20

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