Short Range Outlook : November 2020

Global longs market becomes even more regionalized amid widespread protectionism

The global long steel products market is becoming even more regionalized. All the safeguard measures, tariffs and antidumping and countervailing cases are reducing the global exchange of products more and more. The Covid-19 pandemic gives producers in certain markets the pretext to lobby their governments with even more arguments to get their domestic markets protected for no reason, but politicians just go along and accept this constant pressure as the public is not really focused on such ‘minor’ issues nowadays.

China’s imports start to slacken, it could eventually revert to being a net exporter

China has lately been reducing its purchases of pig iron, HBI, slabs and billets. However, no major change is expected in China at least until after the Chinese New Year holidays. That said, the margins in the Chinese domestic markets have been reduced and expectations are that China will shift from being a net importer to being a net exporter during the next four months.

Possible lifting of China’s scrap import ban could strongly impact global scrap prices

There are also reports that Beijing will allow the import of ferrous scrap with fewer restrictions. The last time China was a significant player in the global ferrous scrap market, it purchased about 14 million metric tons in a single year. Of course, China is a much larger producer, with more EAF-based production now. In the event of China lifting its scrap import prohibition, global scrap prices could increase significantly in view of the large EAF-based capacity the country has recently built up.

2021 will hopefully be a recovery year

On the other hand, next year will be a recovery year globally after all what we have been through in 2020.Accordingly, demand is expected to be relatively good. Of course, the EU and US producers are enjoying full protection, while, as far as Russia, Ukraine, Turkey, Iran and Brazil are concerned, all depends on China.

Some negative signs in the US

In the US, the market situation is worse. Demand is relatively unchanged, though it has been coming under new pressure from Covid-19. On the other hand, the US mills are constantly adding capacity which is not fully utilized, and so supply is increasing. Imports have thin margins, if any.  Domestic scrap prices have moved up again, for no solid reason, which means they will probably be forced down again this winter. Now that Biden is elected as President, there is hope for eventual withdrawal of Section 232 safeguard measures.

Post-Brexit quota reductions announced by EU

The post-Brexit quota reductions have been announced by the EU, and the ‘global’ and ‘international’ volumes seem to have decreased slightly.

Prices in US and EU improve, many countries able to compete with Chinese in Asia

Prices in the EU and US markets have been improving. Despite the recent slowdown, China is still a net importer and does not pose a real threat to exporters in the rest of the world. Even better news is that exporters in countries like Russia, South Korea, Vietnam, India, Brazil and Turkey can compete with the Chinese exporters in Asian markets. However, there is a strong caveat: China has increased its production to over 1 billion. As a result, the world market will be under pressure when its GDP slows down over the winter months.

Competition levels decline worldwide, except in US

The level of competition in the global market is getting lower and lower due to more and more market protections, and competition can be described as relatively slack with the exception of the US market where it is still high.

Global market situation and outlook stable, except for US

The current status of the market can be described as stable, yet again with the exception of the US market which seems to be unstable. The outlook for the next quarter is mostly satisfactory, except for the US market at present.




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