Commodity market report
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40 Pages

Global steel long-term outlook Q3 2014

Global steel long-term outlook Q3 2014

Report summary

Global events have taken a turn for the worse since our last update, with geopolitical tensions and conflicts affecting a number of markets. However our main reasons for revising downwards our global demand forecast have been more related to a general shift in emerging market outlooks rather than the current global malaise. Overall we now expect global steel demand to grow by 1.9% this year, versus 3.5% in our last update.

What's included?

This report includes 2 file(s)

  • Global steel long-term outlook Q3 2014 PDF - 729.15 KB 40 Pages, 3 Tables, 37 Figures
  • SMS LT Q3 2014.xls XLS - 2.29 MB


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 Long 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
  • Market structure
    • China
      • Summary
      • Production
        • Steel production by region in China
        • Production under-reporting in the Chinese steel sector
        • Capacity and industry development
          • Overcapacity hampering steel mill profits
          • Environmental legislations playing a bigger role in capacity closure
          • Qualifying the steel mills
          • Total capacity to stay above 1.1bn tpy in the long term
          • Industry concentration to rise
      • Demand
        • Other key changes to our demand outlook:
        • Construction – residential property has already peaked
        • Construction – infrastructure to offset the decrease in property
        • Manufacturing sectors – high car population to underpin the steel demand
      • Trade
        • Imports
        • Exports
      • Hot metal, DRI and scrap
        • Hot metal production remains under-reported
        • Steel, hot metal production and scrap demand
        • Scrap is a long-term threat to hot metal output.
        • Hot metal production and scrap consumption
        • Japan
        • South Korea
        • Taiwan
        • India
          • Indian steel demand has scope for very strong growth
          • 2014 is a year of two halves and things are looking up after the election
          • Strong government is not a magic pill
          • It will get better... but not overnight
          • Where will the steel come from?
          • The new progressive government in India appears keen to fast-track investment in steel making capacity
          • Projects being advanced include:
        • Vietnam
        • Indonesia
        • Malaysia
        • Thailand
        • Philippines
        • European Union
        • Turkey
          • Turkey volatile in the short-term but more robust in the long-term
        • United States
          • Steel demand going from strength to strength
          • Demand to recover to pre-crisis peak in the long term but not to exceed it
          • US is a world of its own when it comes to steel prices
          • M&A activity is booming in the USA
          • Electric arc furnace production increasingly important in the long term
        • Mexico
          • Outlook for Mexico is looking good with strong demand and production forecasts
        • Canada
          • Slow growth in Canada
        • Brazil
          • For now demand is at a standstill
        • Automotive sector to contract this year but will improve going forward
          • Construction growth stalled, but only temporarily
          • Stronger long term growth
          • Steel imports rising as global oversupply searches for new outlets
          • The investment environment in South America continues to be challenging
        • South and Central America excluding Brazil
          • Outlook for the rest of South and Central America remains uncertain
          • Capacity will grow
        • Russia
          • Construction steel demand to contract this year
          • The current turmoil will have an impact beyond this year
          • Russia increasingly looking east
          • Demand growth to resume next year
          • Long term steel production will be supported by exports
        • Ukraine
          • Domestic steel demand has been falling
          • August was a turning point for steel production
          • Plans to expand capacity will depend on the political situation
          • Hot metal and steel making capacity, latest situation
        • Kazakhstan
          • This year growth is impacted by political turmoil in the region
        • Middle East and Africa
  • Costs
    • Raw materials' perfect storm
    • What is behind scrap's resilience?
  • Prices
    • Supply-demand balances
      • Margins
      • Prices
        • Prices for HRC for three regions
        • Forecast outlook

In this report there are 40 tables or charts, including:

  • Executive summary
  • Market structure
    • Key China forecast numbers
    • Market structure: Image 1
    • Steel production to plateau in the long term, utilisation to improve
    • Market structure: Image 3
    • Residential construction peaked in 2011
    • Social housing projects to provide little support for steel demand growth
    • Construction of underground lines
    • Non-residential construction to drive the long-term steel demand
    • Steel exports are expected to reach ~100Mt in the long term
    • Chinese steel exports by destination (% share) Jan-Aug 2014
    • The hot metal cost has been dropping more aggressively than scrap prices
    • China's scrap availability to reach 289Mt by 2035
    • Market structure: Table 2
    • Market structure: Image 12
    • Despite the hike in consumption tax, steel orders have continued to grow in most sectors
    • Production falls in the long term are likely to trigger more capacity closures
    • Modest increase to per capita steel demand in the medium term with stronger growth in the long term
    • Total steel demand will reach 248Mt by 2035 with stronger growth forecast in the long term
    • Market structure: Image 17
    • …but remains and will remain low in its historical context
    • As we assume lower crude steel production…
    • …Europe's switch to a net importer of steel will occur earlier
    • Net imports are expected to fall further in the remainder of 2014, supporting crude steel production
    • Ramping up of new facilities in the Middle East will discourage additional investment in the medium term
    • In the long term automotive steel demand will fall
    • US steel prices significantly above the rest of the world
    • Steel demand growth constrained by weak investment environment
    • Market structure: Image 26
    • This year declining investment activity will translate to falling steel demand
    • The current crisis will have a negative long term impact on steel demand in Russia
    • Market structure: Table 3
    • Crude steel capacity ramp ups and political instability will reduce semi-finished product import requirements
    • Capacity expansions continue, though political instability and future energy availability remain the key risks in countries with insufficient supplies of gas
  • Costs
    • Exports will remain high in the medium term, depressing prices…
    • …and pushing down global hot metal production costs by $60/t over two years
    • Scrap relationship with iron ore has weakened…
    • …but what will matter in the longer term will remain hot metal production costs
  • Prices
    • Correlation between margins and utilisation rates
    • Utilisation for key regions should see an upwards trend
    • Prices: Image 3
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