Steel short-term outlook November 2021 Report

Commodity Market Report 30 November 2021

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Report summary

Industry-wide power shortage concerns are easing with rising supply and falling prices. Chinese output is expected to fall 3-4% from its peak in 2020, and hopes of demand revival are fading fast due to continual pain in the property sector. Steel prices will remain under pressure and potentially correct further due to weakening demand amid tight supply, rising inventory, and a sharp decline in input costs. Our November short term outlook covers: - Demand weakness, supply pressures, and cost implications in China - Market balance, price outlook, and analysis of tariff-free quota deal between the US and EU - Indian market sentiments and impact of pricing disparity on exports - The role reversal between Japan and South Korea in the road to recovery - Input cost implications and impact of demand-supply balances on steel prices

China
- Chinese steel industry to remain subdued
- Power shortage eases significantly but no support to steel production
- but margins remain high owing to sharper decline in input cost
- What to expect
US
- Will EU steel find a home in the US? Economics says no; carbon rules, maybe
- Will labour and parts take a toll on Biden’s infra agenda?
EU and UK
- EAF-based European producers affected by the surge in electricity prices
- The US agreed to give EU suppliers a tariff-free volume quota
- European crude steel production rises in October 2021
India
- Stalled production growth led by tepid domestic demand
- and waning exports due to softening global steel prices
- Domestic price movement mixed for flat and long products
Japan and South Korea
- The (recovery) rat race between East Asian heavyweights continues.
- Construction to stay put
- Automotive still has pain in the offing
- Manufacturing – the critical growth determinant
- Iron Ore
- Coal
- Scrap
- Green steel initiatives