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 The “race to the bottom” for steel prices has been replaced by a “drive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
In China, the environmental problems from the many outdated and polluting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.
Steel Review - March 2017 Edition
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