Gloomy demand picture prevails in global longs market, but possible bright spots on horizon

The supply and demand balance in the global long steel products market is being impacted strongly by low demand and it is reasonable to expect that, if the US introduces new market protection measures, other countries will follow. There is simply not enough demand in the world for all the steel produced. Despite the overall gloomy scenario of mostly insufficient demand, on the bright side China has continued to announce measures to stimulate its economy, while the incoming Trump administration could take steps towards ending the war in Ukraine and bringing about a ceasefire in the Middle East, which would boost the steel markets.

Chinese exports to continue, impact of stimulus measures remains to be seen

The global long steel products market is looking to find ways to extricate itself from the desperate situation it is in. Unfortunately, exports from many countries, starting with China, are not helping at all. While production in China drops, its consumption declines even more, and so its exports increase. China has introduced stimulus packages and measures to resolve the problems of its weak real estate and construction sectors and excess steel production capacity. In China’s most recent stimulus package, financing of RMB 10 trillion ($1.4 trillion) will be provided to enable local governments in the country swap debts at high interest rates with debts at lower interest rates, which is intended to bolster economic activity nationwide. Nevertheless, the Chinese are on their way towards a record year of exports and will export more this year than the total steel production of the US and Canada combined. It remains to be seen whether this situation will change in 2025 under the impact of the stimuli the government has announced. China may indeed need to take further action, similar to the situation in 2016, and it is best if such action is taken before the Chinese New Year holidays.

US remains bright spot in terms of demand, India to see strong rise in steel consumption

The US remains a consistent source of demand in the world. China’s share of global exports and its trade surplus, meanwhile, have hit a new high. It is not a healthy situation and the US will be taking measures to curb Chinese exports. Looking forward to 2025, it is worth pointing out that worldsteel expects 1.2 percent growth in global steel consumption next year, with a 4.2 percent increase foreseen in developing countries, excluding China, while steel consumption in India is predicted to rise by 8.0 percent and consumption in the developed world is expected to grow by 1.9 percent. In particular, the increase foreseen for India is especially noteworthy.

EU market depressed by low demand, overwhelmed by imports

The EU is suffering from low demand and is overwhelmed by imports. Quotas expire very quickly from the day when they are opened and new exotic suppliers have been finding their way into the EU market.

Outlook for Europe and Germany deteriorates

Europe, and in particular Germany, is in a recession. Finally, all the rules and regulations imposed by the EU and the German government over recent years, combined with great geopolitical uncertainty and stagnating international economies, have hit Europe with full strength. What was expected six months ago is finally reaching the man in the street, who is now feeling that the times of non-existent unemployment are coming to an end. Investments are reduced in all fields of the economy and private spendings are at an all-time low, despite the high salary increases of the last two to three years.

Building industry experiencing a tsunami of empty order books

The building industry is experiencing a tsunami with order books as empty as they were 15 years ago. Unfortunately, no light at the end of the tunnel is anticipated in 2025. Such a consolidation in the cut and bend industry in Germany has never been seen and it seems like this is only the beginning.

All eyes on US after Trump’s re-election

After the recent US election, moves to “get America going again” are expected to be seen. Tariffs are on the table and if equally distributed they may create opportunities for the countries already struggling under the Section 232 duties. However, apart from Mexico, other exempt countries may not receive additional tariffs for their steel. Other products like automobiles, wine, etc., may be affected. China will be the biggest loser in terms of future export opportunities to the US. For this reason, it may be more aggressive in its export strategies without worrying about the global reactions. As for US steel, in the short term, US steel prices will go up with the anticipation of new duties. The easing of interest rates will also stimulate the domestic construction industry. However, the situation may level out by the second quarter next year. Additionally, on the positive side, there are hopes that the new Trump administration will focus on bringing the war in Ukraine to an end, and could also step up efforts to bring about a ceasefire in the Middle East. Such developments would have a huge impact in terms of regional security and provide a strong boost to economies and markets worldwide.

Interest rate cuts offer some hope

On the other hand, interest rate cuts have started in some economies and they may push up commodity prices further if they are continued. In particular, some Europeans are hopeful that business will pick up in 2025.

Markets undergo further fragmentation

There has been a further fragmentation of the markets. Aggressive competition is observed in open markets and fair demand in domestic markets. Competition inside the US is heating up as some products are unable to contribute to fixed costs. Mills in the EU are competing hard with each other to grab every ton available as long as their sales manage to cover their costs. Competition from imports is getting weaker and weaker in the EU as international prices do not attract buyers due to the very small advantage compared to domestic prices and with long lead times making imports too risky.

Unstable and fluctuating global market to continue to face lack of demand

Under these circumstances, the global long steel market can be described as unstable and fluctuating as there is a lack of demand. Unfortunately, the outlook for the market is not so bright, as it still points out to a continuing lack of demand and further fluctuations.

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