Commodity market report

Global steel short-term outlook October 2017

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Report summary

Although the full impact of the 2+26 policy will become apparent only after 15 November, start date of the heating season, the 19th Congress of the Communist Party and the implementing zeal of local officials have precipitated the adoption of anti-pollution measures already in October.This will have far-reaching consequences for China's steel markets over the next six months. Traders in Handan told us they had spent the month playing mah-jong, as steel demand from both manufacturing and construction had died out in the wake of stricter environmental regulations. Only north-south trade is lively, but in the steel powerhouse of northern China both steel demand and steel consumption are already visibly affected. The end of the party congress and the beginning of the heating season will be the litmus test of the 2+26 policy and of our current working hypothesis – that a decline in demand will more than offset the decline in steel production, depressing prices.

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Table of contents

Tables and charts

This report includes 36 images and tables including:


  • Impacted by the 2+26 policy, crude steel production will be reduced by 4.4 Mt in Q4 2017
  • Traders in the 2+26 region have set aside more stocks to meet the environmental regulations
  • EU new vehicle registrations are slowing but they are still growing
  • Steel demand growth was robust in H1, but has begun to slow
  • Stock coverage has finally returned back to long-run levels
  • Though crude output is rising, semis imports are growing more rapidly
  • Weakening automotive demand in the EU and the USA will undermine HRC prices in the remainder of the year.
  • Chinese prices have begun to ease. We expect a sizeable decline within the next 18 months.
  • Hot-metal-production costs will continue to decline in Q4 2017
  • Billet premia have soared in the past 12 months, where will the adjustment come from?
  • Production growth inflated by IF closures
  • Demand indicators point to expansion
  • Apparent demand emerging economies
  • Apparent demand mature economies
  • Production will go down in Q4
  • Exports decline accelerated in Q3
  • Positive PMI indicators
  • Imports outpace production growth
  • US may be nearing top of economy cycle
  • Capacity expansions look premature
  • India real steel demand indicators
  • India crude steel production and net-exports
  • Demand will decline in Q4…
  • …and driven production to go down further
  • Net-exports on the way up…
  • …domestic demand also improving
  • Construction weakness hold back recovery
  • Export struggle to rise, imports soar


  • Prices and other key data
  • Executive summary: Table 2
  • EBITDA margin for selected steel makers
  • Supply-demand balances: Table 1
  • Supply-demand balances: Table 2
  • Supply-demand balances: Table 3
  • Supply-demand balances: Table 4
  • Costs: Table 1

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