Short Range Outlook : August 2018

Global long steel market currently in equilibrium, though world steel output is on the rise

The global long steel products market seems to be in equilibrium at present, with slightly higher freight rates. World steel production is up by six percent, while this situation needs to be monitored. If this continues to be the case for another year or so, we might experience disturbance in the supply-and-demand balance in certain areas.

International business seem better but protectionism could cause rapid changes

Although international business seems to be better, things may change quickly amid the current protectionist environment. The EU has restricted import levels on 23 items compared to last year, which will push prices up, especially when remaining quotas are being used up.

Great new era for US domestic mills but potential downside risks lie ahead

In the US, due to lack of imports or higher additional duty on imports, domestic mills are enjoying a great new era. The effects have not trickled down completely to the consumer yet. The impact will soon be felt and will trigger a higher level of inflation and thus higher interest rates which may prohibit new investments.

Impressive growth rate in US, risks for importers

That said, the growth rate in the US is very high. The country has been growing at a rate of over four percent, which is extraordinary. US domestic mills are expected to continue to enjoy the ride provided by the Trump administration. On the other hand, importers carry a serious risk as the inflated prices may drop down beyond their margins at anytime and for any reason, including investigation by the US Department of Commerce for unfair profiting.

News from China is good

China is consuming more of its own steel as the situation in its domestic market still seems to be very good and is expected to remain so. In addition, the winter season, when production cuts will be seen, is around the corner.

Competition generally reasonable though less effective in some markets due to trade barriers

Competition in the market is reasonable in general. However, it can be considered as not being effective in certain markets due to trade barriers.

Uncertainty prevails in some markets

There is a certain degree of uncertainty as regards the market situation, which may be considered to be stable for certain markets, but which can described as fluctuating and or even explosive for other markets.

World trade under pressure from protectionism

The major reason for such uncertainty is the protectionism which apparently sees no limits nowadays. What happened in Canada with retroactive duties against reinforcing bar imports from Turkey is unheard of. The US is apparently preparing new trade cases and of course many other countries will follow the same path. This is counterproductive to all world trade.

Outlook ranges from close to satisfactory to very good

Notwithstanding all the above, the outlook for the global long steel products market ranges from close to satisfactory to very good for most markets.




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