To read 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.

Related articles

Expert Briefings logo