New Worldwide Steel Trading opportunities

New Worldwide Steel Trading opportunities

Steel Trading has changed dramatically since Donald Trump was elected.  Imported steel has been threatened with additional dumping suits and a potential 20% import tax.  Companies and pipelines are strongly urged to buy American Steel.  Meanwhile scrap and Iron ore prices are rising, causing domestic prices to rise, in a market less suceptible to the price of imports.  Here is an article that sums it up nicely, also adding that China has a strong economy so exports are less necessary, while they lower their total steel output.

“Protectionism has reshaped traditional steel trade routes. New routes have emerged — or re-emerged — amid a swathe of anti-dumping actions and non-tariff barriers adopted in the US, EU, India and other parts of Asia, mainly against China’s rampageous exports as its domestic market growth slowed in 2014-15.

China is targeted in more than half of the 139 dumping actions in force, with restrictions on trade with 21 nations, bringing market opportunities for steelmakers in other countries, including Turkey, the US, EU, Algeria and even Iran, and increasing global steel prices.

Steel market dynamics continue to change, however, with the latest developments again mainly down to activity in China. New consumer spending and a massive infrastructure program are keeping more Chinese steel at home, where prices are strong. Restructuring is cutting some of China’s obsolete or pollutant overcapacity — another market influence.

Chinese steel exports, which have in recent years held mills worldwide to ransom, fell 3% in 2016 to 109 million mt, equivalent to 12% of its output, from a record 112.4 million mt in 2015, and have continued to fall. February’s exports of 5.75 million mt were 29% down on year to the lowest in three years. This also strengthens opportunities for steelmakers elsewhere, now stepping into markets, particularly in southeast Asia, where Chinese products are considered uncompetitive.

US President Donald Trump may also impact world steel trade, with his Buy America campaign and talk of new import duties which will undoubtedly keep domestic prices high, to the chagrin of consumers. Mill margins are currently wide in the US, but mostly narrow for potential competitors in China and Turkey. South Africa has in recent weeks introduced a rule obliging state-owned construction projects to use only locally-produced material, India is promoting a buy local steel campaign and Algeria protects its growing steel production via import quotas.

Still, the scenario continues to be tough: despite a slight uptick in the global economy, growth in international trade lags behind economic growth, with world merchandise trade volumes declining since 2015, according to the World Trade Organization. Steelmakers with weak domestic markets and under-developed protection mechanisms, mainly in Latin America and parts of the Middle East, continue to suffer.”

— Diana Kinch Steel Business Briefing 3/13/17

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