Commodity Market Report

Global steel long-term outlook Q1 2014

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31 March 2014

Global steel long-term outlook Q1 2014

Report summary

This update gives our revised view on steel market fundamentals. Our forecasts of global steel demand are little changed from our interim update published in December, with a combination of faltering growth in key emerging markets and steady, but by no means smooth, recovery in the developed markets remaining the key themes on the demand side.  While China has had a jittery start to the year in terms of sentiment, we remain broadly positive on the medium and long term growth story...

Table of contents

  • Executive summary
  • Demand
  • Supply
  • Supply-demand balance and prices
  • Demand
    • Across emerging markets there is scope for growth, however steel demand is unlikely to achieve its full potential
    • China
      • Steel demand growth recovered in 2013 on the back of higher investment into the construction sector
      • Sector analysis – Construction
    • South Korea
    • India
    • European Union
      • Trade
      • Note
      • North America
        • United States
        • Other North America
      • South and Central America
        • Brazil
          • Trade
        • Other South and Central America
      • CIS
        • Russia
          • Trade
        • Other CIS
      • Middle East and Africa
  • Supply
  • Overview
    • Slowing capacity additions and closures should help utilisation rates
  • Supply-demand balances
  • Costs
  • Margins
  • Prices
  • Overview

Tables and charts

This report includes 41 images and tables including:

  • Supply: Image 1
  • Helped by lower production costs due to falling raw materials prices
  • There exists a good correlation between capacity utilisation rates and mill margins
  • Utilisation rates should see improvement in the key markets over the medium term
  • Utilisation rates in most regions should see a steady improvement over the medium term
  • Over the medium term iron ore and coking coal will experience price weakness
  • with a negative net effect on hot metal production costs
  • 2013 scrap imports fell sharply among key importers, weakening prices
  • USA and EU scrap prices will be supported relative to hot metal production costs
  • BOF unit production costs are expected to remain lower than EAF throughout the forecast period
  • Finished steel costs are expected to weaken further until 2016, more so in the EU and China
  • Costs: Table 1
  • 2013 was a year of weak but improving margins
  • We expect to see margins return to long run equilibrium levels
  • While deterioration has halted, steelmakers continue to face relatively high costs and low prices
  • Greater production discipline allowed US prices to maintain their premium in 2013
  • Improved demand and margins will support price recovery despite weaker cost support
  • Long term, cost support sets in, but we expect price growth trend to remain below pre-crisis peak
  • Prices: Table 1
  • Demand: Image 1
  • India has scope for significant steel demand growth in the coming decades
  • Demand: Image 8
  • Southern European oversupply dampens growth prospects in construction
  • Higher household income and replacement requirements will support growth in CEE
  • EU car production expanded overall in 2013, partly thanks to regained competitiveness in Spain
  • As some EU countries regain competitiveness, the net effect of delocalisation on steel demand will be attenuated
  • Long-term growth in manufacturing is tied to exports, particularly to the MENA region
  • Supply: Image 3
  • Supply: Table 1
  • Demand: Image 2
  • The reliance on investment supports the steel demand
  • China property forecast by sub-sector
  • Demand: Table 1
  • Medium term economic stimuli will counter the effects of population decline on construction
  • Consumer goods will decline as a share of steel demand from manufacturing
  • New cities, reconstruction and housing programmes will support steel consumption in the Middle East
  • In Africa strong demographics have been trumped by weak governance but maintain long term potential
  • We forecast similar growth trend to the 80’s, however no significant rebound is expected in the long term
  • Demand: Image 15
  • Demand: Image 16
  • while car weights and steel intensity will fall

What's included

This report contains:

  • Document

    Global steel long-term outlook Q1 2014

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