Worldwide underlying sector demand has remained lacklustre but this fundamental weakness has not prevented yet another increase in steel prices in December. In China, enforced closures of induction furnaces have helped long product prices rise faster than those of flat products but we do not think that further increases are sustainable. As the speed of capacity clamp-downs drops and raw materials costs ease, weak demand should once again lead to a fall in steel prices. Meanwhile in Europe, short term steel prices will be supported by yet another set of antidumping duties. However, with demand outlook weak for 2017 and no capacity closures in sight, this surge is unlikely to last past the holiday season.
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As global demand weakens and commodity prices fall, we're seeing a challenging environment in the metals and mining industry. Mining companies are increasingly coming under pressure to reduce operating costs, causing many to shift their strategic planning, delay new investments and look to long-term future growth.
This Steel Short Term Outlook report provides a detailed breakdown of global supply and demand balances in this market, as well as price forecasts.
Mining companies, investment banks and investors can use this report to understand the future direction of the ferrous and base metals market. It will also help you assess the impact of key industry issues and events on market balances and pricing.
From acquisitions to investments, Wood Mackenzie helps you plan, forecast and benchmark in the metals markets. Our proprietary database and analyst expertise combines robust production, consumption and pricing data with detailed analysis to identify market opportunities.
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Global imports of HDG into the EU are rising. Imports from China have doubled year-on-year in the last four quarters
EU AD duties imposed on CR coil have all but stopped imports from China and Russia. CR coil imports from countries not subject to duties continue to rise
Low regional price premia will constrain imports
As the energy sector recovers so will OCTG prices
Supply-demand balances: Table 1
Q1 2017 HR coil prices will travel in opposite directions. In the US, price premia are too thin and will start rising, supporting prices. In China and the EU, the year-end price euphoria will come to a reckoning with weakening demand and falling costs
Chinese rebar prices are poised to fall in Q1 as costs and demand fundamentals start to reassert themselves. Some upside risk remains in H1 2017, as government policy on construction and capacity closures at induction furnaces remains uncertain
Supply-demand balances: Table 2
The tide has turned for coking coal and iron ore prices
Turkish imports of scrap caught up with stronger crude steel production, supporting prices
Costs: Table 1
EBITDA margin for selected steel makers (table and chart)
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Commodity market report | Dec 2016
Global steel short-term outlook December 2016
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