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,
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
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.
Steel Review - March 2016 Issue
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