Protection Measures Support Steel
Prices but Disrupt Trade Flows
Supply options for large exporters of steel, such as those in
China and Russia, are becoming limited, owing to existing trade barriers,
implemented by many authorities around the world. As a consequence, steelmakers
are scouring the globe, for new destinations, in which to sell their excess
From MEPS’ research, in October, many Chinese steel market participants report
that they are finding it increasingly problematic to sell into the neighbouring
Southeast Asian market. This is due to the emergence of local mills and strong
competition, from Russian, Indian and Iranian steel manufacturers.
As a consequence, Chinese producers are actively seeking new business
relationships, in the Middle East and Africa, where demand of steel is in excess
of local production capacity. Chinese mills should be confident of increasing
their market share, at the expense of regional suppliers.
Protectionist measures and trade cases, in many parts of the world, are
disrupting traditional flows of material – affecting the ethos of free trade.
In the US, the Section 232 legislation has given local steelmakers the
opportunity to escalate selling values with little resistance, in the past
twelve months. Although figures are softening, from their recent highs.
Cross-border trade across North America has been disrupted by the measures. The
United States-Mexico-Canada Agreement (USMCA) is expected to result in the
removal of steel tariffs, and replacement by quotas, in the latter part of this
Following the introduction of temporary safeguarding measures, European
steelmakers were able to solidify domestic steel selling values, during the
traditionally slow summer period. Weakening sentiment has resulted in a reversal
of the upward price trend, in recent weeks. Nonetheless, it is reported that a
vast proportion of the steel quotas are being under-utilised. Local buyers
appear to be procuring material from domestic sources rather than from
MEPS predicts that the current level of trade protection afforded to steel
mills, in several regions of the world, will help them maintain prices, at their
relatively elevated level, for the foreseeable future.
MEPS - International
Steel Review - October 2018 Edition
Free Sample copies
of MEPS Reports
up for free MEPS steel news alerts