Global steel short-term outlook August 2017 Report

Commodity Market Report 31 August 2017

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Report summary

Global steel prices rallied this month. China saw both HR coil and rebar prices expand by 10% month-on-month. The rise means that Chinese HR coil is now more expensive than European HR coil. The last time we saw this was in April 2016 – a month when Chinese steel prices shot up over 20% only to quickly drop back in subsequent months. We expect history to repeat itself and the negative Europe – China spread will not be maintained. In the US, EU and China, the market is frothy – bolstered by sentiment. With prices elevated, global steelmakers are enjoying exceptional margins. They will still be enjoying large margins despite our forecast hefty price falls which we believe are due imminently.

Executive summary
- Prices and other key data
Supply-demand balances
- China: tightening environmental regulation has driven high production since Q3
  - The "2+26" policy action plan may support production
Costs
Key companies
- Industry developments
  - Operating results
Market structure
- Global
- China
- Europe
- India
- Japan
- Brazil
- Russia

Tables and charts

This report includes 32 images and tables including:

Costs: Image 1
Costs: Image 2
Costs: Table 1

EBITDA margin for selected steel makers (table and chart)
Key companies: Image 1
Executive summary: Table 1
Production growth inflated by IF closures
Mixed demand indicators
Apparent demand emerging economies
Apparent demand mature economies
European imports rise despite trade action on China
Auto industry continues to grow
Market structure: Image 7
Section 232 threat leaves import volumes unperturbed
India real steel demand indicators
India crude steel production
Production set to decline further in H2
Market structure: Image 12
Crude steel production growth slows
Domestic prices rise
Russia crude steel production
Russia steel exports
Supply-demand balances: Table 1
Demand in the construction sector will continue to weaken in H2
Tightening environmental regulation will give pressure to production in Q4, however, we still forecast it will be higher than last year
Supply-demand balances: Image 3
Motor vehicle registrations are still in growth but the momentum is receding
Supply-demand balances: Table 2
Chinese HR coil prices are currently higher than EU HR coil prices. We do not expect this to endure.
Chinese rebar prices remain elevated despite cooling house completions. A price correction is imminent.
Supply-demand balances: Table 3
Key companies: Table 2