Will steel prices rise in 2016?

At the end of last year, global sales of steel products plummeted to their lowest level in more than a decade, as record high Chinese exports triggered an oversaturation of the steel market that lowered the value of transactions around the world.

According to experts, the steady decline in steel prices has now stalled, but it is too early for a turning point. An increase in sales is also observed in Russia, notes ChelyabProfit , which supplies sheet metal products to all regions of the Russian Federation and the CIS countries. That said, Chinese suppliers are likely to continue to boost their exports at low prices amid a weak outlook for domestic consumption.

The Chinese government has pledged to cut crude steel production by 100-150 million tonnes. However, it remains unclear how and how quickly this should be achieved in order to have a significant impact on global oversupply. Russian suppliers are also emerging as a growing threat in global steel markets as they boost exports due to the weak ruble. Huge volumes of Chinese and Russian metal will continue to enter the global market, further increasing the pressure on transaction prices.

Consequently, global steelmakers and stockbrokers will be forced to offer steel at a low price, in some cases below cost, in order to secure orders. Most steel companies are experiencing significant losses and factories will close or scale back operations to equalize profits.

In North America, operations are being shut down or objects are idling. US imports slowed during the winter months due to transport problems and the successful resolution of several trade cases. As a result, domestic manufacturers have been largely successful in promoting product sales. However, MEPS believes that any sustained recovery in global steel prices is unlikely due to weak demand and continued overcapacity.

MEPS believes that European steelmakers have reached a low point, but the European steel industry will have to restructure, just like North America, if it is to survive in a global overproduction situation. However, there is a feeling that European firms will go out of business.

As the Chinese economy slows, a significant recovery in global steel prices is unlikely, despite a slight increase in transaction values ​​earlier this year.