Steel Outlook

Published on - 8th March 2024

Navigating The Steel Landscape: Key Insights

  • Global Steel Demand Dynamics: In 2024, global steel demand exhibits mixed trends with a notable decline in China by 4% due to challenges in the property sector, reducing demand from 506 million tons (MT) in 2023 to 485 MT. Conversely, India showcases robust growth, with demand expected to increase by 7.5% to 129 MT, attributed to strong domestic consumption. The US market is predicted to see a steady rise in demand to 100 MT, up from 93 MT in 2023, reflecting a stable economic outlook. Europe, however, faces a downturn, with steel consumption falling by 6.3% to 129 MT due to economic challenges and rising costs. 

  • China’s Market Challenges: The Chinese steel market faces significant pressures, including a continuous slide in the Manufacturing PMI from 49.5 in October 2023 to 49.1 in February 2024, indicating weakening demand for steel. The property sector, a critical driver of domestic steel demand, is experiencing sustained difficulties, with real estate prices dropping for seven consecutive months until January 2024, leading to a decline in HRC steel prices in February 2024. 

  • US Steel Market Outlook: In the US, steel prices have shown an upward trend in January 2024, driven by healthy construction activity and stable domestic demand. The Inflation Reduction Act and the American Jobs Plan are significant contributors to this demand, offering financial incentives and allocating substantial funds for infrastructure, thereby stimulating steel consumption.

  • European Steel Sector: Despite a decrease in domestic steel demand in the EU, steel prices have risen due to escalating energy costs and raw material prices. The drop in demand (6.3% in 2023 to 129 MT) contrasts with increasing production costs, affecting overall market dynamics. 

  • Indian Steel Consumption and Pricing: India’s steel market benefits from increased infrastructure spending, with the government’s interim budget raising allocations by 11% for FY 2024-25. This fiscal policy boosts demand, with domestic steel consumption projected to grow by 7.5% to 129 MT. Subsequent increases in primary and secondary steel prices are observed, reflecting a positive market outlook. 

  • Decline in Chinese Steel Production: China’s steel output in January 2024 fell by 6.9% to 77 MT, reflecting mandatory reductions and dampened domestic demand. This decline contributes to a 1.6% drop in global steel production, despite healthy production growth in India and stability in the US. 

  • Iron Ore Market Trends: The iron ore market is witnessing a downturn, with prices hitting a 4-month low of $116/ton, driven by diminishing steel demand from China’s contracting property sector. Global iron ore supply is forecasted to increase by 3.8% in 2024, potentially adding pressure to prices. 

  • Coal Price Fluctuations: The coal market, particularly for Australian coking coal, is experiencing price declines, with a 5.2% drop YTD in early February 2024 to $316/ton FOB. Production targets by major producers and market demand dynamics are influencing these price movements. 

  • Steel Import-Export Shifts: Changes in global steel trade are evident, with China increasing its steel exports due to surplus supply and weak domestic demand, while India becomes a net importer due to robust internal demand. The US and EU see reductions in imports, influenced by tariffs and geopolitical factors. 

  • Impact of Fiscal and Monetary Policies: Global fiscal policies and monetary easing are expected to support demand recovery in the steel sector. However, the effectiveness of these measures may be moderated by sector-specific challenges, particularly in China. With Fed, ECB and BOE on possible rate cut path, money supply and global liquidity will be ample enough to push for a commodity price increase. However underlying demand supply dynamics should be conducive enough for the final prices to go up.  

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