Commodity market report

Global steel short-term outlook May 2017

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Report summary

Is the rise of rebar prices in China unstoppable? It certainly looked like it in May when the previous month correction reversed and prices reached new highs of almost US$550/tonne. Two arguments go in favour of supporting a bullish view: capacity closures and the strong performance of construction activity. The government has kept an unwavering focus on capacity closures and has publicised its determination with frequent updates on progress which is faster than expected. Total building completions were up 10% year on year in the first four months of 2017 and sales for construction related machinery equipment were twice as high in April 2017 than in April 2016.

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    Global steel short-term outlook May 2017

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    Global steel short-term outlook May 2017

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  • Document

    Global steel markets short-term outlook data May 2017 version 1.xls

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Table of contents

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

Tables and charts

This report includes 34 images and tables including:

Images

  • Key companies: Image 1
  • Costs: Image 1
  • Costs: Image 2
  • Global crude steel production
  • Manufacturing PMI
  • Steel apparent demand: emerging economies
  • Steel apparent demand: mature economies
  • Key construction indicators point to steel demand growth in the EU…
  • …but domestic producers are not the biggest beneficiary
  • Market structure: Image 7
  • Rising vehicle inventories pose downside risks to automotive steel demand
  • India real steel demand indicators
  • India market structure
  • The seasonal lull will impact demand in the construction sector...
  • Market structure: Image 12
  • Brazil automotive production
  • Brazil market structure
  • Russian production increase supported by export orders
  • Increasing business confidence evident in automotive sector
  • Rebar price has been higher than HR coil price since March
  • Domestic price has also been around US$100/t higher than export price since March
  • Supply-demand balances: Image 3
  • Supply-demand balances: Image 4
  • The divergence in the performance of construction and motor vehicle output in the beginning of this year is in line with our expectations of steel demand for these sectors through 2017.
  • Both rebar and HR coil price spreads, over shredded and No.1 busheling scrap respectively, have declined in the past year, though the gap between the two spreads has substantially narrowed.
  • Chinese HR coil prices stabilised in May, protectionism remains rampant and manufacturing did well in Europe and in the US. Does this point to rising EU and US HR coil prices? No. Regional premia over Chinese material are two to three times the long-term average. Even indirectly, China has started to drag EU and US prices down. Expect further falls.
  • May rebar prices in China continued to surprise on the upside. The focus on capacity cuts and the intense infrastructure stimulus might have created short-term support to prices. But costs are now falling fast. Failing a construction boom, rebar prices will follow.

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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