Commodity market report
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19 Pages

Global steel short-term outlook July 2016

Global steel short-term outlook July 2016

Report summary

Steel prices had a mixed month in July, rising in China and, for the most part, declining in Europe and the USA. In China, stock levels have stayed at historical lows, fostering a perception of a tight market that has had a supportive effect on prices. Although late in the month prices eased slightly, we maintain that they will keep rising in H2, supported by low stocks and better utilisation rates, triggered by accelerating capacity cuts in the second half. In Europe and the USA steel prices remained overall stable or fell less than we expected. Although good underlying demand from the automotive sector is lending some support to prices, most of the support is coming from anti-dumping duties, which are sheltering the EU and the USA from competitively priced imports. Regional premia remain too high in both regions, leaving open arbitrage opportunities that sooner or later will force a realignment to lower global prices.

What's included?

This report includes 2 file(s)

  • Global steel short-term outlook July 2016 PDF - 518.83 KB 19 Pages, 7 Tables, 31 Figures
  • Global steel STO July 2016 DataFile.xls XLS - 292.00 KB


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.

We give you a holistic view of the ferrous and base metals markets so you have the confidence to make strategic decisions.

  • Executive summary
  • Supply-demand balances
    • China: low steel inventories support prices
      • Capacity cuts have gathered pace since June
    • EU: steelmakers face weakening demand
      • EU steelmakers make investments downstream
      • Anti-dumping measures are keeping EU steel prices higher for longer
    • US steel prices have eased marginally
      • Three factors supported steel prices in July
      • Good times cannot last forever
        • Steel and scrap prices (tables and charts)
  • Costs
    • More volatility in July iron ore markets
    • Spot coking coal price holds at $100/tonne CFR China
    • Scrap prices
  • Key companies
  • Market structure
    • Global
    • China
    • Europe
    • USA
    • India
    • Japan
    • Russia
    • Brazil

In this report there are 38 tables or charts, including:

  • Executive summary
    • Prices and other key data
  • Supply-demand balances
    • Price recovered from early June to mid-July
    • Chinese crude steel production revised up
    • Supply-demand balances: Image 3
    • …whereas UK CPI growth was negative in May with a continued decline in steel demand likely.
    • Total EU CPI is negative, however the region continues to have positive steel demand growth, albeit subdued.
    • UK new passenger vehicle registrations decreased year-on-year in May although total EU registrations grew.
    • In the US, HR coil prices have followed a normal pattern and have increased when the market is tight and stocks are low
    • Despite the trade cases attracted by high US domestic prices, imports have actually started to rise
    • Supply-demand balances: Table 1
    • Robust demand from automotive supported steel prices in the EU and the USA in July, but regional premia remain high.
    • Steel inventories at their lowest since 2010 have lifted steel prices in China. We expect more of the same in H2.
    • Supply-demand balances: Table 2
  • Costs
    • Korea generates enough scrap to withstand fluctuations in scrap import prices...
    • ...while Turkey domestic availability of scrap is lower and purchases are more volatile
    • Costs: Table 1
  • Key companies
    • EBITDA margin for selected steel makers (table and chart)
    • Key companies: Image 1
    • Operating results
  • Market structure
    • Global crude steel production stagnates
    • Diverging PMI indices
    • Demand is improving in emerging markets…
    • Demand is diverging in the mature economies
    • Crude steel production will continue to rise in Q3
    • Another round of re-stocking will start in Q3
    • EU steel imports have not decreased...
    • The EU has become a net importer of steel
    • Underlying steel demand growth remains slow
    • Steel service centre stocks have fallen…
    • Indian steel demand continues to grow…
    • Trade wars continue
    • The construction sector will continue to be weak until August
    • Production recovered in Q2, and will continue to increase in Q3
    • Demand outlook remains weak…
    • Finding a destination for exports is difficult…
    • 2016 marks a low point for Brazilian steel demand
    • 3Mtpa of crude steel capacity comes on line
    • Key quarterly data
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