Hebei Borun Steel Trade CO.,LTD





Sales & Support
Request A Quote - Email
Select Language
About Us
Factory Tour
Quality Control
Contact Us
Request A Quote
Home News

How long will the Steel price recovery last?

Good quality OCTG Accessories for sales
Good quality OCTG Accessories for sales
I'm Online Chat Now
Company News
How long will the Steel price recovery last?

The MEPS world steel price advanced for the second successive month, in February, as flat product values increased in North America and Asia. 

Global selling figures plummeted to their lowest level for more than a decade, at the end of last year, as record-high Chinese exports caused a steel supply glut, which put negative pressure on transaction values worldwide. 

The steady decline in steel prices appears to have come to a halt but it is too early to see this as a turning point. MEPS believes that the increase in selling figures, albeit from a remarkably low level, is purely supply-driven, as opposed to indicating any significant uptick in demand. 

There is growing evidence that both steel supply and demand in China are decreasing but the latter will continue to weaken at a faster rate. Therefore, Chinese suppliers are likely to continue to pitch their exports at low prices amid a weak consumption outlook domestically. 

Consequently, global steel manufacturers and stockists are forced to offer steel at low margins and, on occasion, below cost, to secure orders. The majority of steelmakers are making significant losses and the situation is not sustainable in the long term. It is inevitable that mills will be forced to close or scale down operations, to reduce capacity to align with real, or profitable, demand.

This is certainly the situation in North America as mills withdraw capacity by extending outages or idling facilities. The US electric-based mills, in particular, have the short-term option of scaling back production. However, the futures of tens of thousands of US steelworkers are likely to be in doubt if the mill utilisation level does not increase. 

As capacity is removed, delivery lead times for flat products are extending as local buyers restock following the holidays. Imports into the US have slowed down because of transport issues over the winter months and the successful introduction of several trade cases. As a result, domestic producers have been largely successful in advancing flat product selling figures, following list price announcements, in December and January. 

However, MEPS believes that any sustained recovery in global steel prices is unlikely because of weak demand and continued overcapacity.

The Chinese government has pledged to cut crude steel production by 100-150 million tonnes. However, it is unclear how and how quickly this would have to be achieved, to have any significant impact on global oversupply. Russian suppliers are also becoming an increasing threat in global steel markets as they increase exports because of the weak rouble. Vast quantities of Chinese and Russian material will continue to enter the world market, which is likely to put further downward pressure on global transaction prices.

MEPS believes that European steel figures are likely to have reached their lowest point but the European steel industry will need to restructure itself, much like the North American mills, if it is to survive the global oversupply situation. The European Union has been criticised for not reacting quickly enough to the rapid rise in steel imports from non-EU sources. There is a feeling that more European firms will go out of business.

As the Chinese economy slows down, no significant upturn in global steel demand is expected, this year. Consequently, a significant recovery in world steel prices is unlikely, despite a small rise in transaction values at the start of this year.

Pub Time : 2016-03-04 09:44:11 >> News list
Contact Details
Hebei Borun Steel Trade CO.,LTD

Contact Person: Ms. Melody C.

Tel: 86-317-5501333

Fax: 86-317-5501333

Send your inquiry directly to us (0 / 3000)