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Home > MEPS Steel News - 30.08.2016

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 recent months.

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.

 

Source: MEPS International Steel Review - August 2016 Issue

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