Very positive prospects for global long steel market in 2018

The supply and demand balance in the global long steel products market has improved and may now be described as excellent. Demand remains strong almost everywhere and sentiment is also very good. It seems that 2018 will be a replica of 2017 as the prospects are very positive.

China has been the main story in 2017

China has been the main story in 2017. It is not exactly out of the market: indeed it may be said that the Chinese are the ones who altered the situation in the global market when their export availability declined on month-on-month basis during the whole of last year. China is still not a supply factor, but is certainly in the background looking to purchase more steel billets when they become available.

Steel exports from China expected to remain reduced

Many countries in Asia have relied on Chinese semi-finished steel for the last four to five years. Last month, more destinations reopened for scrap imports as melt shops have to be restarted in Asia. For the first quarter of 2018, we can expect steel exports from China to remain reduced, which will continue to drive local steel mill demand elsewhere.

Recent price drop in China unlikely to change positive scenario for 2018

The recent price decrease in China may have raised some questions, but it is part of the up and down movement of the market and is not expected to change the brilliant scenario predicted for 2018.

Market focuses on impact of decisions in US and Turkey

Another concern is what President Trump will decide in relation to trade issues. On a separate note, it is difficult to predict the market reaction in Turkey following the surprising cancellation of the import duty on reinforcing bars. Market players are very interested in gaining a clear picture of the impact of decisions made in these two countries.

Iron ore price stable, scrap price may fluctuate, graphite electrode price rises

The iron ore price is stable at US$75/mt CFR FO main Chinese ports. Scrap prices could move either up or down, which will directly affect the profitability of EAF furnaces. Meanwhile, it looks like graphite electrode prices have risen by 15 percent in less than 30 days.

Economic recoveries in many countries drive global demand for steel

Oil and other commodity prices, especially metal prices, are up. PMIs are positive and growth rates are also up. Global demand for steel is good due to the economic recoveries observed in many countries. This means more investment in infrastructure projects by governments and the private sector, and thus greater need for steel. In the US, there is a carrot of US$200 billion worth of infrastructure spending spread over a few years.

Regionalization of trade boosts profitability of steel industry

The regionalization of steel trade has meant shorter shipments and healthier demand in home markets, driving up collection of scrap and profitability for the steel industry and the supply chain.

Competition at low levels in global market except for US

The level of competition in the steel markets is very low in general, with the exception of the US domestic market – where capacity utilization is still officially below 75 percent – which gives producers in the US little pricing power.

Very positive outlook for 2018 with negative surprise from China highly unlikely

The global long steel market is stable and in perfect shape to proceed with a very good outlook. Demand remains very strong. Summing up, the outlook for 2018 looks very positive as long as there is no negative surprise in the form of an unexpected sudden slowdown in the Chinese economy, which at present appears very unlikely.

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