The upward trend in global steel values continued in February, with North American and European flat product steelmakers securing a vast proportion of their tabled price hikes, owing to improved market fundamentals.
From MEPS research, in February, many North American and European steel buyers report that rising international selling figures aided the latest price advances. Domestic steelmakers were given the opportunity to lift values, in the absence of competitively priced alternatives, notably from Far East suppliers.
Steel manufacturers in China took advantage of government closures of local induction furnaces and improved demand conditions to raise domestic prices significantly, in the second half of 2017. Consequently, less material is available for overseas markets. Export volumes slumped by 30.5 percent in 2017 year-on-year.
Following a surge in late November and early December along with a subsequent downward correction in late December and early January, Chinese steel selling figures stabilised, ahead of the Lunar New Year. In the post-holiday period it is likely that local values will move up owing to restocking activity.
Amid stable demand projections for 2018 MEPS expects Chinese prices to reach their peak, mid-year, as a consequence of the withdrawal of the winter production restrictions in mid-March. It is reported that electric-arc melted material will be introduced to replace the lost induction furnace output. Consequently, Chinese production is expected to rise, in the second trimester of 2018. This could threaten the sustainability of the current global steel price recovery.