Commodity market report
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19 Pages

Global steel short-term outlook May 2016


Global steel short-term outlook May 2016

Report summary

In China, speculation, easing monetary policy and more ambitious targets on capacity closures were not sufficient to sustain a price surge and steel prices have started to fall in May. HR coil has already eased by US$100/tonne since the end of April and we expect to see further falls. To date prices in Europe and the US have not followed suit and this has increased the regional price premia drastically. By the end of May, the European HR coil price exceeded the Chinese export price by US$140/tonne while the US price was US$340/tonne higher. These markets are somewhat protected by the latest import duties, but not fully. With price premia this high, imports will rise albeit from countries not covered under trade restrictions and this should bring steel prices down in Europe and the US in the coming weeks.


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  • Global steel short-term outlook May 2016 PDF - 511.25 KB 19 Pages, 8 Tables, 25 Figures
  • SMS 2016 05 DataFile(V1.2).xls XLS - 285.00 KB

Description

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: reality returns to the market
      • Infrastructure is the saviour in the short term?
      • Government plans to speed up capacity cuts
      • The influence of the futures market weakens
      • Anti-dumping cases continue
    • EU: strong automotive demand compensates for mixed construction demand
      • Domestic production constraints and reduced imports squeeze supply
      • High EU steel prices have peaked
    • US steel prices: what goes up must come down
      • Restocking will provide some support for prices
        • Steel and scrap prices (tables and charts)
  • Costs
    • Monthly iron ore prices retreat 8% month-on-month in May
    • Spot coking coal prices poised to drop?
    • Turkish scrap prices peak
  • Key companies
    • Industry developments
  • Market structure
    • Global
    • China
    • Europe
    • USA
    • India
    • Japan

In this report there are 33 tables or charts, including:

  • Executive summary
    • Prices and other key data
  • Supply-demand balances
    • The government's policies on steel capacity control
    • Speculation was a factor supporting the recent price rally but the effect is weakening
    • Low steel inventory should support steel prices in H2 2016
    • EU steel exporters are being squeezed out of the Algerian market by cheaper Chinese material
    • At US$186, the May average spread between North European and Chinese domestic rebar may present an opportunity for arbitrage
    • Import displacement has already started
    • Further destocking cannot be sustained
    • Supply-demand balances: Table 2
    • Chinese steel prices have begun to decline in May
    • We expect US and EU prices to follow Chinese prices down
    • Supply-demand balances: Table 3
  • Costs
    • Iron ore stocks: total port stocks are at their highest level since December 2014.
    • Billet imports to Turkey are currently at a monthly average price premium of 25% above Turkish scrap. This is the lowest premium for at least six years.
    • Costs: Table 1
  • Key companies
    • EBITDA margin for selected steel makers (table and chart)
    • Key companies: Image 1
    • Operating results
  • Market structure
    • Diverging demand in emerging markets
    • Steel demand in mature economies will grow…
    • Crude steel production starts to increase in April...
    • Chinese trade faced with barriers
    • Growth in the construction sector is mixed…
    • Market structure: Image 6
    • Underlying steel demand continues to grow
    • Steel import pressure remains
    • Steel demand growth continues…
    • Crude steel production continues to rise…
    • Crude steel increases, finished steel decreases
    • Construction weak in Q1
    • Market structure: Image 13
    • Crude steel production seasonally stronger
    • Key quarterly data
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