GLOBAL MARKET OUTLOOK – October 2016 S&P Global PLATTS
Global steel demand will increase 0.2% to a little more than 1.501 billion metric tons this year, according to the World Steel Association’s short range outlook. This upward revision is largely founded on the stronger than expected performance in China, where the expectation is for demand to be 1% lower year-on-year, rather than the 4% drop previously anticipated.
The better-than-expected Chinese demand has helped support the domestic market even as production remains unconstrained. The country’s output in the first nine months of the year is in fact higher than at the same point in 2015 having seen a 3.9% year-on-year increase in September, making a mockery
of the rhetoric surrounding production curtailments. However, with exports still up around 2.7% y-o-y for the first nine months of the year, there is less pressure on domestic prices and therefore less need
to curtail output.
And steel prices have firmed since the week-long national holiday, with high raw materials costs forcing steelmakers to push for higher sales prices in China. Restocking needs lent further support to a firming market as many mills had been keeping very lean inventories.