Global Steel Prices Expected to Rebound
The downward trend in global steel prices continued, in February. North American and European flat product steelmakers failed in their attempts to secure any of their tabled increases. The consensus view, from MEPS’ February research, is that the bottom may soon be reached, in both regions. Sentiment is, generally, turning positive – with the market showing potential to stabilise, or rise slightly, in the coming months.

World steel manufacturers are likely to be supported in their efforts to lift values, by the improving market fundamentals. Rising raw material expenditure and the expectation of improved activity, during the traditionally stronger second trimester, will assist the mills’ cause for higher prices. 

With the exception of material in North America, scrap expenditure has started to increase, worldwide. At the same time, iron ore costs rose, due to supply-side fears – resulting from the recent dam collapse in Brazil. Market participants are hopeful that demand from the European and North American automotive sector will pick up, in the coming months. Moreover, construction activity will be boosted, by seasonal factors. In addition, the continued impact of the Section 232 trade legislation and the recently introduced EU safeguard measures will offer US and European steel manufacturers a degree of protection from increased import volumes. 

Improved demand, in Asia, due to restocking activity following the Lunar New Year, is expected to lead to a modest pricing uptick across the region, in the coming months. However, the medium-term demand prospects are, generally, less clear – with Asian economies, in particular, China, expected to slow down, in 2019. 

Heightened trade tensions, notably, between the US and China, plus the UK’s exit from the European Union, are causing a great deal of uncertainty among global steel buyers. MEPS forecasts that any reversal of pricing fortunes, in Europe and North America, is likely to be modest and short-lived.