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Home > MEPS Steel News - 28.03.2017

GLOBAL STEEL PRICE RECOVERY EXPECTED TO FALTER SOON

The global steel market is, currently, unrecognisable from that prevailing at the start of 2016, according to MEPS International. The negative situation in early 2016, of low selling prices, global oversupply and claims of unfair trading conditions is almost a thing of the past. It is now being replaced by an atmosphere of mild optimism.

The industry appears to have come to a less confrontational stance. After the imposition of numerous antidumping cases by western and eastern countries, against Chinese and other major exporting nations, the flow of steel has reduced. The “race to the bottom” for steel prices has been replaced by a “drive for the top”.

However, it is likely that, in the flat products sector, global prices are near to peak values in the current cycle. Supply and demand are moving more into balance. However, any decrease in selling values is likely to be less severe than those experienced in previous cycles.

Lessons appear to have been learned. Building up an industry to production levels well beyond domestic demand will inevitably create retaliation from the authorities in those countries that are affected by imports of the resultant oversupply.

In China, the environmental problems from the many outdated and polluting facilities have now prompted the government to instigate real cuts in capacity. Many of the older steelmaking units are now scheduled for permanent closure. For other plants, the management will be forced to install equipment to solve the current pollution situation.

The new policy of the Chinese authorities will be welcome news for the local population. It could be a forerunner to more normalisation in the trading of steel in the future across the world. A reduction in Chinese steelmaking capacity to nearer domestic requirements would be welcomed in the international steel market. It would also avert any rapid reduction in steel selling figures as the producers ramp up output to take advantage of the current high prices.
 

 

 

Source: MEPS International Steel Review - March 2017 Edition

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