Mid-year Margin Analysis in key markets – how much farther will they fall?

After an extraordinary recovery since a low point late last year, flat-rolled steel suppliers are starting to give back some of their margins, which have been high by recent standards.



After an extraordinary recovery since a low point late last year, flat-rolled steel suppliers are starting to give back some of their margins, which have been high by recent standards. The Chinese, who were as badly off as the Europeans late last year – judging by MBR’s estimate of “metal spreads” between the prices of HR coil, iron ore and coke (see italicised explanations below) - have been the first to compromise but their western rivals are following suit. Before we can answer how far they are willing to go, however, let’s first take a closer look at where they are and how they got here.



So far this year, the implied margins at integrated steel producers in China, assuming here that spot prices - which are effectively dealer not producer prices - are reflective of mill prices, have briefly revived to levels not seen since early 2013,...

Published

Alistair Ramsay

July 19, 2016

00:00 GMT