Sluggish Start to 2019 for The
Global Steel Sector
The recovery in global steel prices has stalled. A proportion
of the steelmakers’ price gains secured in 2017/18 were lost in the final few
months of last year. Import protection methods, via Section 232, in the US, and
safeguarding measures, in the EU, failed to halt the slide of steel prices.
Owing to a significant reduction in demand, most notably from the automotive
sector, talk of mill price hikes, in Europe and North America, quickly subsided.
The negative sentiment has continued, this month, across flat products, in
particular. Steel market participants are, generally, unsure about the future
pricing trend, due to a number of political and economic uncertainties.
MEPS’ January research indicates that a lack of seasonal restocking has been
noted, so far, this year. Many steel buyers remark that they are reluctant to
place new orders, in anticipation of further price reductions being offered. It
is highly likely that the worsening macroeconomic climate in a number of
European countries, and the UK’s impending exit from the European Union will
give further cause for concern, during the course of the year.
Few indicators give reasons for optimism, currently, in the North American steel
sector. The slowdown in auto sales, the diminishing impact of Section 232
measures and an uptick in domestic supply have contributed to a rapid decline in
flat product selling values, in recent months. Many US steel buyers remark that
further price erosion is likely, in the near term.
Despite existing trade legislation, MEPS highlights that the global steel market
is hugely exposed, either directly or indirectly, to the actions of the world’s
largest steelmaker, China. The recent deterioration in Chinese domestic and
export prices appears to have been halted, ahead of the Lunar New Year holidays.
It is projected that Chinese values will increase, in the spring of 2019, as
local demand improves.
It is widely expected that the traditional recovery in flat products prices, at
the turn of the year, will be delayed. Inventory replenishment, in world
markets, is likely to take place in the second quarter. MEPS believes that the
scale of any pricing revival will be modest – with political and economic
uncertainty expected to continue to undermine market sentiment.
MEPS - International
Steel Review - January 2019 Edition
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