Global steel prices are under pressure

In its latest quarterly review, Global Metals & Mining assesses the position of steel products in the market and draws some encouraging conclusions for consumers in terms of pricing over the next 18 months.

Currently, global capacity has kept utilization below 80 percent, resulting in limited ability to influence price increases. After several years of outright recession and then near-zero growth among most European countries, manufacturers have approached stock levels more cautiously this summer.

Demand is currently lower outside Asia due to seasonal downturns in the northern hemisphere summer months, but both Europe and North America are modestly maintaining inventory levels. The fall in iron ore prices has put price pressure on producers now, and global GDP growth is predicted at 2.4 percent and global consumption growth of about 2 percent, slightly below the basis point forecast in early 2014.

Falling ore costs and lower coking coal prices contributed to some improvement in profit margins for producers. Therefore, steel prices are expected to soften towards the end of the year as consumers demand to reflect lower raw material costs in the medium term.