International Steel Market Weekly Report: Dynamic Interweaving of Prices, Supply and Demand and Trade Policies

一. Price trend: fluctuating downward, with significant regional differentiation

1. The comprehensive index continued to fall

This week, the global steel benchmark price index fell further, down 1.2% from last week, continuing the downward trend in recent weeks. Among them, the long product price index fell significantly, down 1.8%, and the flat product price index also fell 0.9%. This decline reflects the weakness of overall market demand and the relative surplus on the supply side.

2. Regional price differences are obvious

In Asia, steel prices generally fell. Affected by the continued downturn in the real estate market and sluggish demand in the manufacturing industry, the price of 20mm HRB400 thread in Shanghai fell to 3160 yuan/ton, down 40 yuan/ton from last week; the price of hot-rolled 3.0mm was 3270 yuan/ton, down 40 yuan/ton from last week. Due to the slowdown in domestic economic growth in the Indian market, demand for steel has also been suppressed, and prices have fallen to varying degrees.

Steel prices in the European market are volatile. For hot-rolled coil, EU steel mills quoted $710/ton, down $10/ton from last week; for cold-rolled coil, EU steel mills quoted $810/ton, unchanged from last week. Price fluctuations in the European market are mainly affected by regional economic recovery differences and competition from imported steel.

Prices in the US steel market are stable with a slight decline. The ex-factory price of hot-rolled coil in Midwestern steel mills is $960/ton, down $20/ton from last week; the ex-factory price of cold-rolled coil is $1,220/ton, unchanged from last week. The adjustment of US market prices is related to the progress of domestic infrastructure construction and the capacity adjustment of steel companies.

3. Different varieties of prices have different performances

• Flat products: Hot-rolled coil prices continued to fall this week. In China, due to high market inventories and weak demand growth in downstream home appliances, automobiles and other industries, hot-rolled coil prices have been under pressure. In the international market, with the weakening demand in Southeast Asia, South Asia and other regions, China's hot-rolled coil export quotations have also declined, currently around US$462/ton (FOB). Cold-rolled coil prices are relatively stable, but they are also facing certain downward pressure. In Europe, the demand for cold-rolled coils mainly comes from high-end manufacturing, but some companies have recently reduced orders, making prices lack the momentum to rise.

• Long products: Rebar prices have fallen in most parts of the world. In China, the downturn in the construction industry has led to continued sluggish demand for rebar and serious inventory backlogs. In the international market, affected by the decline in China's rebar export prices, market prices in Southeast Asia, the Middle East and other regions have also been adjusted down. Wire rod prices also performed poorly, and market trading activity was low. 

 
二. Supply and demand: supply adjustment, demand remains weak

1. Supply side: capacity regulation and resource allocation

• Global iron ore shipments and domestic arrivals: Global iron ore shipments declined this week, mainly due to weather-related production cuts at some mines in Brazil, and slightly reduced shipments from Australia. Domestic iron ore arrivals declined accordingly, and port inventories decreased to a certain extent. However, with the improvement of domestic mine capacity utilization, domestic iron ore concentrate production increased, which to some extent eased the pressure on raw material supply. 

• Steel production and cost: According to Mysteel's survey, the blast furnace operating rate of 247 steel mills was 83.69%, a decrease of 0.46 percentage points from the previous month, and the blast furnace ironmaking capacity utilization rate was 91.32%, a decrease of 0.44 percentage points from the previous month. The profit margin of steel mills was 59.74%, an increase of 0.43 percentage points from the previous month. In terms of long process, the gross profit of rebar, hot rolling and cold rolling in the industry changed by 0 yuan/ton, +23 yuan/ton and +69 yuan/ton respectively compared with the previous week; in terms of short process, the gross profit of electric furnace steel changed by -20 yuan/ton compared with the previous week. In terms of cost, the market price of domestic ore fluctuated, the market price of imported ore fell, the price of scrap steel fell, the market price of coke fell, the price of main coking coal in North China fell, and the price of main coking coal in East China remained the same. Overall, the production cost of steel mills has decreased.

• Adjustment of steel mill production: Faced with weak market demand and falling prices, some steel mills began to actively adjust their production plans. Some Chinese steel mills control production by reducing blast furnace operation time and reducing capacity utilization to ease inventory pressure. Some European steel mills are also considering reducing production to cope with the competition from imported steel and insufficient domestic market demand.

 
2. Demand side: Both domestic and foreign demand are weak

• The domestic demand structure is differentiated: the domestic demand for construction steel continues to be sluggish, and indicators such as the newly started area and construction area in the real estate market continue to decline, which has significantly suppressed the demand for construction steel such as rebar. Although there has been a certain increase in infrastructure construction investment, the overall pull on steel demand is limited. In terms of manufacturing, the output of the home appliance industry has declined slightly year-on-year due to market saturation and adjustments to export tariff policies, and the demand for steel has been weak; although the output of the automobile manufacturing industry has maintained year-on-year growth, due to the trend of lightweight automobiles, the amount of steel used per unit of automobile has decreased, which has also limited the growth rate of steel demand.

• International demand is constrained by multiple factors: the global manufacturing index continues to decline, and the prosperity of external demand is still weak. The global manufacturing PMI released by the China Federation of Logistics and Purchasing in April was 49.1%, down 0.5 percentage points from the previous month. JPMorgan Chase's global manufacturing PMI in April fell back in the expansion range to 49.8%, down 0.5 percentage points from the previous month. The pressure on the global economy has reduced the demand for steel in various countries. In addition, the intensification of trade frictions has also had a suppressive effect on steel exports. Recently, Brazil, India, Canada and other countries have successively launched anti-dumping investigations or imposed anti-dumping duties on Chinese steel products, which has seriously affected China's steel exports. 

 
三. Trade policies and events: Trade protectionism is escalating, and policy impact is prominent

1. Trade protection measures are frequent

The Foreign Trade Secretariat of the Ministry of Development, Industry, Trade and Services of Brazil issued an announcement to make an affirmative preliminary anti-dumping ruling on galvanized and galvanized steel coils originating from China, which will further restrict China's exports of related products to Brazil.

India announced a temporary tariff of 12% on some imported steel products to protect domestic steel manufacturers from the adverse effects of a surge in imports. This move will have an impact on the global steel trade pattern, especially on countries and regions that export steel to India.

The Canadian Border Services Agency issued an announcement to initiate an anti-dumping investigation on carbon steel wire and alloy steel wire originating in or imported from China, India, Italy, Malaysia, Portugal, Spain, Thailand, Turkey, Vietnam and Taiwan, China. The rise of trade protectionism has made the global steel trade environment increasingly severe.

2. Trade policy adjustments and impacts

After the release of the "Joint Statement of the China-US Geneva Economic and Trade Talks", China's export tariffs on steel and steel products to the United States were reduced to 65% and 63% respectively. Due to the slight relaxation of steel tariffs during the 90-day exemption period and the limited total volume of Chinese steel exports to the US, this round of US tariff adjustments may support the resilience of indirect steel exports. However, in the long run, the uncertainty of trade policies still exists and needs to be continuously monitored.