Commodity market report

Global steel short-term outlook July 2016

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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 contains

  • Document

    Global steel STO July 2016 DataFile.xls

    XLS 292.00 KB

  • Document

    Global steel short-term outlook July 2016

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    Global steel short-term outlook July 2016

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Table of contents

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

Tables and charts

This report includes 38 images and tables including:

Images

  • Key companies: Image 1
  • Korea generates enough scrap to withstand fluctuations in scrap import prices...
  • ...while Turkey domestic availability of scrap is lower and purchases are more volatile
  • 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
  • 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
  • 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.

Tables

  • 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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