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Home > MEPS Steel News - 30.03.2016

MEPS REPORTS A MODEST REVIVAL IN GLOBAL STEEL PRICES IN MARCH

Supply-side factors are starting to provide a boost to global steel values. As a result, the MEPS world steel price advanced, in March, for the third successive month.

Chinese steel mill price offers soared, this month, as buyers rebuilt inventories following the Lunar New Year holidays. Flat product values in North America continued to rise, after some US producers announced a third price hike in as many months.

We detect growing evidence that European selling figures are likely to have surpassed their lowest level in the current cycle after increasing slightly, this month.

MEPS believes that the rise in global transaction values is mainly supply-driven, either through mills closing or scaling back production. Trade protection measures, specifically in the US, are curtailing imports.

In February, global crude steel output fell by 3.3 percent, year-on-year. The world’s biggest steel producer, China, reduced supply by 4 percent, compared with twelve months ago.

Supply may decline further, in the near term, as Chinese steel mills, in Tangshan, are reportedly being ordered to reduce pollution during an international flower show between April and October.

Last month, crude steel manufacturing, in the European Union, fell by 6.3 percent, year-on-year, as German output slipped by 4.3 percent. UK production was slashed, by more than a third, as over 4,000 jobs were lost last year as SSI’s UK plant was closed. The country’s largest domestic steelmaker, Tata Steel, also announced a series of job cuts at its UK operations.

In February, US steel production increased by 2.9 percent, year-on-year. This is the first rise in fourteen months. Customers reported that preliminary antidumping duties on flat rolled products from several countries are starting to bite.

One MEPS source remarked that recent US price advances were “a slight breeze rather than a gale or hurricane”. However, offshore options are likely to be restricted further, over the coming months, which will give domestic producers a stronger position from which to raise local transaction figures.

Global selling values slipped to their lowest level for more than a decade, at the end of last year. Steelmakers have been forced to take decisive action, by cutting capacity or prompting trade cases. With energy and mining consumption remaining at relatively low levels, no significant uptick in worldwide steel demand is expected in 2016.

Despite the recent rise in transaction values at the start of this year, MEPS believes that any prolonged recovery in world steel prices is unlikely unless global overcapacity is addressed further.


Source: MEPS International Steel Review - March 2016 Issue

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