Commodity market report
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18 Pages

Global steel short-term outlook June 2016

Global steel short-term outlook June 2016

Report summary

Chinese steel prices remained low in June, kept down by two trends. The first was the staggering surge in steel production in May, when annualised rates surpassed peak 2014 production. The second is the realisation, brought about most clearly by the slowing down of private investment, that the outlook for steel demand is weak. The good news for prices is we expect a recovery in H2. In Europe, the decision of the United Kingdom to leave the European Union adds uncertainty to our steel demand growth outlook. Should investment falter, the outlook for steel demand in the construction sector would worsen, particularly in countries that were just beginning to experience a long-awaited recovery.

What's included?

This report includes 2 file(s)

  • Global steel short-term outlook June 2016 PDF - 493.67 KB 18 Pages, 7 Tables, 29 Figures
  • SMS 2016 06 DataFile(V1.1).xls XLS - 284.50 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: market is weakening
      • The manufacturing sector grew steadily in Q2
      • Proposed capacity cuts by provinces align with the national target
      • Production continued to increase in Q2
      • Prices are expected to recover in H2 2016
    • Uncertainty in the EU will exacerbate sluggish steel demand growth
      • Struggling EU steel mills look to secure ongoing operations
      • Price premia across the EU are out of balance
    • US steel prices will ease
      • Steel prices will ease as supply increases in a weak demand environment
      • Trade cases do not offer a permanent defence from low-cost imports
        • Steel and scrap prices (tables and charts)
  • Costs
    • Monthly iron ore prices stabilise in June
    • Spot coking coal price hovers around $90/tonne
    • Scrap in the loop
  • Key companies
    • Industry developments
  • Market structure
    • Global
    • China
    • Europe
    • USA
    • India
    • Japan
    • Russia
    • Brazil

In this report there are 36 tables or charts, including:

  • Executive summary
    • Prices and other key data
  • Supply-demand balances
    • Steel inventories declined sharply in Q2
    • Inland provinces will lose a larger proportion of their capacity
    • In construction, growth in Italy may stop, while the UK is likely to contract further
    • Northern European rebar premia are at historic highs
    • We expect to see destocking across the end-use sectors
    • When regional price premia are high trade cases do not provide a permanent defence against low-cost imports
    • Supply-demand balances: Table 1
    • Chinese steel prices have delined further in June
    • EU rebar prices have declined in June and we expect HRC and US prices to fall in the coming months
    • Supply-demand balances: Table 2
  • Costs
    • As mills margins have turned negative, iron ore prices have lingered at $50/tonne
    • Scrap consumption collapsed in May probably as imports dried up, triggering a downwards price adjustment in June
    • 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 declines…
    • India bucks the trend
    • Improved demand in Q1 for emerging markets…
    • Global PMI indices are decreasing
    • Market tipping to over-supply
    • Exports rise from last year
    • Growth in the construction sector is mixed
    • Market structure: Image 8
    • Restocking is expected in H2 2016
    • Steel imports remain low…
    • Infrastructure plans will support demand…
    • Trade wars continue
    • EAF increasingly uncompetitive
    • Exports rebounded in May
    • Market structure: Image 15
    • 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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