Section 232 Probe Creates Chaos in Global Steel
The consensus view from MEPS research, this month, is that a
large degree of uncertainty persists in the global steel market. It is becoming
increasingly evident that North American and European steel buyers are hesitant
about making purchasing decisions, in the current protectionist climate.
Last month, the US authorities introduced a 25 percent tariff on steel imports.
Concerns regarding the final outcome of the Section 232 probe have developed
around the world. These, particularly, relate to the potential for the diversion
of trade into the EU. As a result, the European Commission is investigating the
possibility of introducing further trade legislation. The likelihood is that
existing and additional trade protection measures would lead to a decrease in
imports and, potentially, cause supply shortages, in the US and EU.
It is widely perceived that protectionism restricts the choices for the
customer. These measures are designed to safeguard the strategic interests of a
steel-producing nation. Customers would, arguably, be denied the opportunity to
procure material at competitive prices.
In North America, regional mills have been given relatively free rein to
escalate flat products’ selling values, in recent months – with minimal
resistance from buyers. Amid a healthy trading environment, many US stockists
remark that availability of material has tightened. At the end of this month’s
research period, it was increasingly apparent that the positive pricing
momentum, within the region, is stalling. MEPS believes that US flat product
transaction values are nearing the peak of the current cycle. It is likely that
US prices have now increased to levels at which imports are competitive, once
again. Furthermore, local steelmakers intend to raise production. This should
prevent shortages from developing.
Despite existing and potential new trade measures, MEPS predicts that global
steel prices will come under negative pressure, in the second half of 2018.
MEPS - International
Steel Review - April 2018 Edition
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