Stability in China and firm demand in most markets
Chinese prices have finally started to change direction, heading south this month, though lower supply and relatively firm demand (especially from the automotive sector) have prevented large falls. In fact, HRC export prices dropped by USD 10/t. Although small, the price decline was enough to influence other markets, such as Brazil and Russia. However, domestic prices in these two markets remained almost stable, as steel demand recovers.
In North America, major US steelmakers have announced price hikes, as demand remained relatively firm. Despite the good performance, domestic producers remained concerned, as finished steel imports were almost 20% higher year-on-year between January and September. The pressure on Mr Trump’s administration continued though no results of the 232 Investigation was announced or promised this month. Meanwhile, Mexican domestic steel sales grew by 15.8% (the highest increase in the last seven years), in the first eight months of 2017, when compared to 2016. This was due to the increase in consumption by the automotive sector and the measures implemented by the Mexican government to reduce steel imports, especially from China.
In Asia, demand for steel continued to grow. For instance in India, finished steel consumption rose by 5.5% year-on-year in October 2017, due to a consistent improvement in demand from different end users, including housing, railways and automobiles sector. Similarly, in Japan, steel demand was strong due to several new projects for the 2020 Olympic Games and the automotive industry (cars sales accumulates an overall annual increase of 7.2%).
In Europe, the anti-dumping on HRC imports increased the spread between European domestic prices, reaching EUR 10/t, which shows a large decrease in HRC imports. However, prices of the other flat products such as CRC and HDG remained stable. Meanwhile, the Italian government is trying to find new partners for the ArcelorMittal-Marcegaglia Joint Venture to avoid The European Commission stop the acquisition of the Ilva plant, putting over 10,000 jobs at risk. The commission has already shown concern that the JV would become too dominant in the supply of galvanised steel products in the local market.
This is excerpts from our November issue of Flat Steel Insider. To find out more about our service please click here