The MEPS Global average all products composite steel price increased, in 2018, by 16 percent, year-on-year. Firm economic conditions and steel demand growth supported the upturn in selling figures.
Nonetheless, the cyclical recovery in the global steel market appears to be reaching its zenith, after hitting its low point in late 2015 / early 2016. Indicators suggest that the economic upturn, worldwide, is losing momentum. Escalating trade tensions weigh heavily on the near-term outlook. Protectionist measures have the potential to disrupt global supply chains, inhibit end-user demand for steel-containing goods and adversely affect business confidence and investment.
Inflationary Effects Anticipated
Slowing GDP growth rates, in the coming years, are dampening the prospects for further gains in selling figures. Nevertheless, a number of factors are expected to underpin steel prices, in the long term. Despite limited upside potential for iron ore and coking coal benchmark values, the premium for high-grade raw materials should remain elevated. Furthermore, MEPS anticipates inflationary effects from other forms of mill input expenditure, such as those for energy, electrodes, refractories and ferro-alloys.
EU & Asia
Consolidation in the European steel industry, along with trade protection measures on finished steel products, should support prices in that region, in the coming years. Meanwhile, the Chinese government’s wide-ranging plans, to cut excess steelmaking capacity and curb pollution, are expected to restrict expansion in steel output, in the long term. This should prevent the re-emergence of substantial oversupply in Asia.
The longevity of the United States’ Section 232 measures is uncertain. Many market observers believe that the import tariffs will be applied for a significant period of time. The tariffs are expected to support local selling figures at high levels, whilst they remain in effect. Nonetheless, following the rapid price gains, in 2018, market participants are expected to adapt to the new environment and selling figures are predicted to normalise, in the long term.
Source: MEPS International Ltd
Purchase: MEPS Steel Price Forecasts to 2023