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Home > MEPS Steel News - 21.12.2017

China’s Influence on the Global Steel Sector Persists

The actions taken in China continue to influence the global steel market. Following capacity cuts earlier in the year, the Chinese authorities recently announced the latest round of production restrictions, from mid-November to mid-March, in an attempt to reduce pollution during the winter. The expectation of a further tightening of supply has given Chinese prices, in particular long products, a boost, after a degree of pricing stability, in the early part of the fourth trimester.

Following the closure of hundreds of scrap-based induction furnaces, Chinese steel selling figures have been on an upward trajectory for the majority of 2017. This led to Chinese steel manufacturers prioritising sales to the domestic market and a reduction in export volumes.

In recent years, North American and European producers introduced a number of trade petitions, in particular on flat products, to limit the direct impact of Chinese imports. Several European steel market participants remarked that a shortage of competitively priced material from third country sources has given regional mills the opportunity to maintain steel values, at a relatively high level. This developed in the absence of low-cost alternatives.

MEPS believes that surging Chinese values should enable producers in Japan, South Korea and Taiwan, as well as many other parts of the world, to lift their selling figures, in the first quarter of 2018. However, we expect that global transaction values, in this period, are likely to represent the peak of the current cycle – with prices projected to decline during the rest of the year.


 

 

Source: MEPS - International Steel Review - December 2017 Edition

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