China’s control of its domestic steel industry could create price stability in the country, while in other regions, namely Europe, prices keep rising. This was suggested at the Kallanish Europe Steel Markets virtual conference on Wednesday by both Dick Sands of Stemcor and Kallanish European Editor Emanuele Norsa.
“China is keeping the lid on steel prices because, for them, it’s crucial to keep the local economy stable,” Sands said, with reference to the recent price correction and the taxation of exports. Unlike previously, “the export tax risk is now in the court of the buyer,” he noted.
Such moves can safeguard supply to the domestic market. Only then, China will take the next step – to reduce production internally in the interest avoiding pollution, without undermining the economy, Sands believes. He recounted a visit to the Korean coast years ago, “where the sky was blue when you looked east to Japan, and darkly polluted when you looked west to China”.
On the attitude of mills in Europe and North America, he stated that neither will be massively ramping up production, in the interest of keeping prices up. He believes this could sustain the high level of prices for years to come, a thought also expressed by Antonio Marcegaglia in the conference’s opening session (see separate story).
Looking at the moves of the new US government, he believes US prices should relax somewhat, while European prices may still inch up, “so that they will eventually converge later this year”.
Christian Koehl Germany
