Steel Price Forecast and Market Outlook

Steel prices are falling, as are the inputs upon which carbon steel surcharges are based. IHS Markit forecasts that steel prices, which peaked in March and April, are starting a decline that will last well into the second half of 2017. Raw materials spiked in late 2016 and had a secondary jump in April. These spikes are rapidly falling away, and with them the price of finished carbon steel. China appears to have accumulated an inventory glut and should, along with all of East Asia, present very attractive buying opportunities by late summer. As a result, IHS Markit recommends delaying purchases if possible and buying spot rather than locking into a contract.

Stainless is more neutral, but presents a slight bias toward buying sooner rather than later. Stainless prices are increasing but the pace has slowed. Chrome remains expensive but nickel is oversupplied, so prices are suffering. Stainless will rise slowly across the second half of 2017, but not by enough to cause harm unless an unexpected supply disruption occurs.

To learn more, visit Commodity Coverage – Metals

Supply Forecast

  • Steel supply is in excess, China having set an all-time record for production in March, at the same time, China is losing share in export markets in Europe, India, the United States and others due to antidumping actions
  • Because China makes half of the world’s steel, the glut will impact supply and prices globally
  • IHS Markit forecasts that China will lower its steel inventory by cutting production sharply, however, even with such cuts, it would take until late 2017 before balance is restored

Demand Forecast

  • Steel demand is up globally, but is certainly not booming. Automotive, construction and energy investment are growing but at a modest pace
  • No demand sector is growing so fast as to truly pressure steel availability. If there are shortages, they would generally be from a supply disruption, not from a boom in demand (with the exception of higher-quality bar for drilling activity, mostly in the United States)
  • The second quarter of each year is typically the strongest for steel demand. Construction in all major regions is kicking off, feeding straight into steel demand. With US president Donald Trump's pledges of infrastructure building, construction steel demand should be strong

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