Commodity market report

Global steel short-term outlook April 2017

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Report summary

In China the government trod the narrow path of economic readjustment. On the one hand, the never-ending stimulus continues. A mega tax cut will start in July benefiting consumers and industries alike and an urban hub will be built almost from scratch to ease the demographic pressure on the Beijing area. On the other hand, concerns of an overheating property market remain. Measures introduced in Q1 to cool the market have not worked and construction activity continues unabated. Rebar prices have therefore done well, they surpassed European prices in February and March, but they have started to falter in April. A fall is inevitably, high stock, falling costs and stubbornly high crude steel production will promote it. Endless stimuli to the economy will, however, soften the fall.

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Table of contents

  • Executive summary
      • The property sector will turn weak later than we expected
      • Plans for a new city
      • Deeper-than-expected tax cuts
      • Capacity cuts gather pace
      • High production will undermine prices
    • Coking coal prices continue to fall, though less smoothly
    • Industry developments
    • Global
    • China
    • Europe
    • India
    • Japan
    • Brazil
    • Russia

Tables and charts

This report includes 36 images and tables including:


  • Key companies: Image 1
  • Costs: Image 1
  • Costs: Image 2
  • Crude output reached a record level in March
  • EU leads global expansionary sentiment
  • Emerging markets' apparent steel consumption
  • Mature markets' apparent steel consumption
  • EU vehicle production and registrations grow…
  • AD duties are not deterring total imports
  • Market structure: Image 7
  • Q1 2017 sees seasonal increase in utilisation
  • Indian output rises as JSW becomes largest producer…
  • …though end-use demand shows uncertain path ahead
  • Domestic demand upside expected from May…
  • Market structure: Image 12
  • Brazil steel demand indicators
  • Brazil steel-market structure
  • Russian light vehicle sales stall
  • Russian construction down
  • The recent spike in coal prices will erode steelmakers margins and slow price falls
  • Demand surprised on the upside in Q1
  • EU imports of HR coil from China have been replaced by material from other origins including Brazil, India and Turkey
  • European HR coil prices may have begun to follow Chinese prices downwards
  • Supply-demand balances: Image 5
  • Supply-demand balances: Image 6
  • The impact of Obama's escalation of steel duties was primarily on Chinese-origin material
  • Service center destocking through Q1 suggests that their demand outlook for the coming quarters is more bearish than at end of 2016
  • April premia over Chinese material in Europe and in the USA stood at US$150 and US$269/tonne, much higher than historical norm. While strong demand and trade barriers may protect prices in the near term, price erosion is inevitable.
  • With high stocks and falling costs, we expect rebar prices in China to continue their fall in the coming months. Upside risk to our forecast are an unexpected strong performance in construction and local market tightness as capacity continues to be shut down.


  • Prices and other key data
  • EBITDA margin for selected steel makers (table and chart)
  • Costs: Table 1
  • Operating results
  • Key quarterly data
  • Supply-demand balances: Table 1
  • Supply-demand balances: Table 2

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