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May, 21st 2018

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Weekly Steel

Issue20-18 16 May 2018

Kallanish Steel Weekly: US gambles with 232 fatigue

US President Donald Trump’s 232 pronouncements earlier this year continue to stir the global pot as individual companies and countries alike seek clarity.

In this edition, we will take a look at the difficulties facing exporters in the Chinese market. Some traders are considering short-selling their material to avoid slipping prices, but they are finding a limited number of buyers willing to take on new material.

Turkish traders are hunting for alternatives to the US market just in case the European Union is granted an exemption following the 1 June deadline that is not extended to Turkey.

The overall feeling there is one of confusion and uncertainty as traders try to figure out what the market will look like in the near-term.

The possibility of an exemption for the European Union remains just that, and prices are reflecting that uncertainty across nearly all product categories.

Finally, in the North American market itself, the 232 is sparking concerns of a summer steel shortage as imports dry up. Associated 232 market movements, like the renegotiation of the North American Free Trade Agreement, have stalled on concerns about domestic auto material content and jobs.

Issue19-18 09 May 2018

Kallanish Steel Weekly: Trade heats up: China responds to the US

At the beginning of last week, US authorities announced the results of their latest negotiations regarding the new tariffs for the import of steel. Whilst confirming agreements with Argentina, Brazil and Australia for permanent exemption from the measures, they also said that negotiations with Canada, Mexico and the EU will continue until the end of May.

The extension of the temporary exemption from the measures could well be positive news, but it also increases the uncertainty for a further month in key markets such as the EU.

Meanwhile Argentina and Brazil confirmed that they have accepted a quota system related to the tariffs, meaning Brazilian exports to the US will be somewhat reduced from the levels of 2017 going forward. Argentina’s sales will be capped at a certain level.

As negotiations continue, most eyes are focused on the possible trade war that this new measure could create between the US and China. Last week the Chinese authorities said that they stopped pre-certification of US scrap cargoes and will inspect every single shipment of US scrap entering the country.

Starting 4 May and lasting until 4 June 2018, “China’s ports will empty each and every container of scrap material originating from the United States of America,” according to a notice from the North American arm of the China Certification and Inspection Group. The notice covers all types of scrap but for metal scrap it highlighted that it would check for the presence of powdery substances. The body also said it had suspended processing applications or issuing certificates for pre-shipment inspection of scrap cargoes.

Issue18-18 02 May 2018

Kallanish Steel Weekly: Global crude steel output continues to rise

The World Steel Association (worldsteel) says that global crude steel output from its 67 reporting countries was 148.3 million tonnes in March 2018, up 4% year-on-year. Capacity utilisation also rose on-year again during the month.

China produced 74mt in the month, an increase of 4.5% on March 2017 and just about half of the world’s crude steel output.

In the EU28 total March crude steel production was practically static, rising by just 0.5% y-on-y to 15.1mt. Estimated output in Germany hardly moved y-on-y at 3.9mt. Monthly production grew y-on-y in Italy by 1.0% to 2.3mt. French crude steel output rose on-year in March by 1.5% to 1.4mt. Spanish output was down by -4.1% to 1.3mt.

US crude steel output was 7.3mt in March 2018, an on-year increase of 5.3% whilst in Brazil crude steel production was 3.1mt, up by 7.6% on March 2017.

Issue17-18 24 Apr 2018

Kallanish Steel Weekly: Steel demand continues its broad recovery despite China

The World Steel Association (worldsteel) has released its April 2018 short range outlook (SRO) forecasting that global steel demand will reach 1,616.1 million tonnes in 2018, an increase of 1.8% on 2017. In 2019, it is forecasted that global steel demand will grow by 0.7% to reach 1,626.7mt.

Steel demand is benefitting from favourable global economic momentum, but facing risks from rising global trade tensions, chairman of the worldsteel economics committee T.V. Narendran says.

Despite this, the Chinese steel sector will return to a deceleration trend. “In 2017, the mild government stimulus measures provided some boost to construction activity, but investment continued to decelerate and steel demand showed only a moderate increase despite the stimulus,” worldsteel cautions. Chinese steel demand in 2018 is expected to stay flat. In 2019, it is expected to contract by -2% with a further slowdown in construction activity.

The economic outlook for developed economies remains robust with steel demand in the developed world expected to increase by 1.8% in 2018 and decelerate to 1.1% in 2019. Steel demand in emerging and developing economies (excluding China) is expected to increase by 4.9% and 4.5% in 2018 and 2019 respectively.