The Fitch Group firm predicts however that 2017 will see steel prices edging up. “We expect the January to June 2016 steel rally to fade and prices to head lower in the latter half of 2016 as declining Chinese steel demand growth, stemming from a slowdown of the country’s construction activity, will result in an oversupplied market,” the firm said in its report. It expects prices for steel to trade in the range of US$450 to US$520 per tonne during the second half of 2016, with the average price for the entire year coming to US$480 a tonne. “Over first half of 2016, steel prices rallied due to a combination of high demand from Chinese steel users restocking the metal, government stimulus measures implemented in the housing market and positive investor sentiment,” the firm added.
On the outlook for 2017, BMI Research said: “Although we forecast the JanuaryJune 2016 steel price rally to fade over the latter half, prices will gradually edge higher from 2017 onwards, due to Chinese supply moderation.” BMI Research also added that the global steel market will see a surplus of two million tonnes in 2016, a decrease from a 2015 surplus of 12.2 million tonnes.
The global steel market will tighten and shift into deficit from 2017 onwards, decreasing the stocks-to-use ratio from 13.6 percent in 2016 to 11.6 percent by 2020. “Despite this, prices will remain subdued by historical standards. For instance, our 2016 to 2020 average of US$518 per tonne is significantly lower than the annual average of US$667 a tonne during 2011 to 2015,” the firm said.
APMEN Sept 2016, News
