TRADE CASES ARE TRANSFORMING THE
GLOBAL STEEL INDUSTRY - MEPS
According to MEPS, the sustainability of the recent global
steel price recovery is likely to depend on supply-side considerations. The
success of trade actions, amid a steady demand outlook will be important.
From MEPS research, in August, a number of US steel buyers remarked that the
American market is becoming increasingly ‘protectionist’. The introduction of
trade barriers on a number of flat products supported domestic producers, by
restricting imports. This helped propel steel prices to financially viable
levels for most US steel mills.
Many market participants and even end-users conceded that local values needed to
rise from their historically low levels, with the assistance of trade petitions,
to safeguard the long-term interests of the US steel industry. However,
protection comes at a cost – the restriction of consumer choice. Exporters could
also be threatened by reciprocal action by the named countries.
This month, the US Department of Commerce set final antidumping duties on hot
rolled flat steel from Australia, Brazil, Japan, South Korea, the Netherlands,
Turkey, and the UK, for five years.
The current differential between US domestic steel prices and international
selling figures is likely to encourage more steel shipments, from countries not
covered by the trade petitions, in the second half of the year. With other trade
cases pending, US imports are at relatively low levels, but they have risen in
From MEPS research, in August, it was noted that value-added imports from
Vietnam have become more readily available during the past four weeks. Other
countries are likely to follow their lead.
One steel buyer labelled the US as the “go-to market” and said that a rise in
imports will put negative pressure on domestic prices, which are already down
from June highs. With this likelihood, new trade actions could be lodged by US
producers. However, such measures will only provide a short-term solution. Until
the issue of global overcapacity is addressed, it is likely that world steel
prices will continue to be under negative pressure.
With the support of trade cases, global steel prices steadily rose, during the
first half of the year. MEPS has long predicted that until crude steel
production capacity is removed from the world scene, prices will continue on a
downward trend into the future.
We do not expect global prices to fall to late 2015/early 2016 levels.
Steelmakers are likely to retain a proportion of the increases that they
successfully secured in the first six months of the year.
Steel Review - August 2016 Issue
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