Downturn in steel prices continue

During the past month, the downturn in international steel prices, as reflected in our steel price index (see chart), has continued as expected.

The exception to this general rule has been the Chinese domestic market and as a consequence, in our opinion, Chinese export prices, which have been rallying alongside. In last month’s issue we detailed the upside risks to Chinese prices borne from how tight supply/demand fundamentals in that country had become. Partly reflecting the relative demand strength in China, seasonal weakness aside, and arguably more importantly, the rising production costs at the country’s integrated producers (see raw mats), local prices have been rising more quickly than export prices. Chinese export prices are effectively lower than domestic prices for most flat-rolled steels, which some market participants would...

Published

Alistair Ramsay

September 28, 2016

00:00 GMT