Falling Chinese Steel Prices Raise
Despite the recent price recovery, world steelmakers will
continue to be concerned about the future policies of the Chinese mills. In
recent years, Chinese steel manufacturers were criticised for selling their
excess supply, in global markets, at low prices.
The Chinese government’s measures, to cut capacity and curb pollution, have
played a leading role in raising steel prices, worldwide. However, the mandated
winter production cuts are unlikely to have the same impact as they had in
Chinese steel demand has been relatively firm, this year, and this encouraged
mills in the country to raise their production. In fact, China’s National Bureau
of Statistics reported that domestic crude steel output, in the first ten months
of 2018, increased by 6.4 percent, year-on-year. However, MEPS understands that
local demand has slowed down, markedly, in recent months.
Due to weakening domestic market fundamentals, it is predicted that Chinese
suppliers will turn to traditional export markets. Competition from new local
steelmaking facilities, in those regions, and major exporters, in Turkey, Russia
and India, is fierce. It is possible that vast quantities of material will enter
the global steel market, as a result.
The current trade legislation, implemented in North America, via Section 232,
and in Europe, through the European Commission’s safeguarding measures, will
afford regional steelmakers a degree of protection, against low-cost imports.
However, MEPS forecasts that oversupply will continue to be a factor on the
global steel scene. This will, undoubtedly, threaten the sustainability of the
recent price revival, during the course of next year.
MEPS - International
Steel Review - November 2018 Edition
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