Commodity market report

Global steel short-term outlook January 2017

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Report summary

Over the coming months much of the outlook for steel prices will depend on government policies rather than traditional supply demand fundamentals. In China steel prices will depend on the balancing act between further capacity reductions and government support for the steel consuming sectors for example a possible continuation of tax cuts for the manufacturing sector. In the US prices will be heavily affected by the expected NAFTA renegotiations and other possible import restrictions. Meanwhile in Europe there is a possibility that the ruling on duties of HR coil imports from Russia and anti dumping duties on rebar from Belarus combined with stronger than expected steel demand could provide some foothold for prices through H1. On balance we believe that easing raw material costs will gradually bring steel prices down. However there is an underlying upside risk to our forecasts.

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Table of contents

  • Executive summary
  • Supply-demand balances
  • Costs
  • Key companies
  • Market structure

Tables and charts

This report includes 37 images and tables including:

Images

  • Key companies: Image 1
  • Restocking ahead of Chinese New Year supported iron ore prices, but stocks are at peak levels…
  • … and we expect iron ore prices to join coking coal in a downwards trend, when trading resumes.
  • Global steel production was up 0.7% year-on-year
  • Most PMIs point to expansion…
  • Emerging markets' apparent steel consumption
  • Mature markets' apparent steel consumption
  • Production remained high in Q4 2016, but will decline in Q1 2017
  • Steel stocks at traders increased moderately
  • EU Steel imports
  • EU apparent demand and crude steel production
  • Activity across steel-using sectors is improving…
  • Steel imports eased in December
  • India crude steel production…
  • India steel demand…
  • Demand in the construction sector remains weak
  • Production expected to decline in the short term
  • Brazil steel demand indicators
  • Brazil steel supply and demand picture
  • Russia crude steel production…
  • Russia automotive production…
  • Governmental regulations are only one factor constraining steel production.
  • Domestic prices have risen faster than export supported by stronger domestic demand.
  • ADDs have not proved enough to firm rebar prices for long. We maintain this will be the case in Q1 too. But upside risks, particularly a certain demand-based euphoria, are stacking up.
  • Despite the strong reading for manufacturing activity in January, we maintain that a slowdown is imminent in the automotive sector, a key steel consumer.
  • US exports more steel to Mexico than it imports.
  • We expect restocking to continue through Q1 2017.
  • Strong leading indicators for manufacturing created some market euphoria, supporting EU prices in January. We expect the boon to be reaching a turning point.
  • Falling raw material prices and further destocking after Chinese New Year should keep a downward pressure on Chinese rebar prices. ADD may delay the effect of the weaker price environment in Europe, though not for long.

Tables

  • Prices and other key data
  • EBITDA margin for selected steel makers (table and chart)
  • Costs: Table 1
  • Market structure: Table 1
  • Infrastructure plans
  • Supply-demand balances: Table 2
  • Supply-demand balances: Table 3
  • Key companies: Table 2

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