To read the full version of this content please select one of the options below:

Global steel market will still face oversupply

Wednesday, March 2, 2016

Subject

Slow cuts to global steel overcapacity.

Significance

In 2015, global steel output fell 2.8% compared to 2014, reaching 1.62 billion tonnes. China's production dropped by 2.3% to 804 million tonnes. In 2015, European benchmark steel prices fell by 27%, from 480 dollars/tonne to 350 dollars/tonne, while Chinese prices suffered a 41% drop, from 440 to 260 dollars/tonne. Margins at many steel-making groups contracted, as steel prices fell faster than the cost of raw materials. Large-scale job losses intensified in Europe, with the United Kingdom and Spain enduring the most of the capacity cuts.

Impacts

  • Latin American production could suffer from Asian competition unless sector-specific safeguards are introduced.
  • Renewed dollar appreciation could make dollar-denominated debt unsustainable for many emerging-market steel-makers.
  • BRICS exporters will suffer tariffs imposed by the US Department of Commerce.
  • India will remain the industry's best hope for growth, due to its urbanisation and still low per capita steel consumption.
Expert Briefings Powered by Oxford Analytica
Stay up to date
Sign up to the Expert Daily Briefings email alert and receive up-to-the-minute analysis of global events as they happen.
*If your university does not have access to Expert Briefings, visit our information page to find out more.