International Steel Market Trends

Recently, the international steel market has been under continuous pressure, with prices generally declining. Multiple factors have intertwined, leading to significant changes in the supply-demand pattern. According to the latest data from the World Steel Association, global crude steel production in September decreased by 2.1% year-on-year, marking the third consecutive month of negative growth and an increasingly evident trend of weak demand. The trading volume in the Southeast Asian steel billet market is light, with mainstream export quotes from China remaining at $453-455/ton CFR Jakarta. However, Singaporean traders have reported that actual trading volume has decreased by more than 30% compared to last month, and buyers are generally adopting a wait-and-see attitude. Some traders have inventory backlog of over 20%, and market confidence is insufficient.

Trade frictions intensify market uncertainty, and industrial chain restructuring accelerates:

The continuous upgrading of global steel trade barriers has had a significant impact on the market. On April 9th, the United States maintained anti-dumping and anti subsidy measures on large-diameter welded pipes from China, South Korea, India and other countries, imposing tariffs of up to 65%, resulting in a year-on-year decrease of 18% in Chinese exports of related products to the United States. Korean and Indian companies are also facing the dilemma of order loss. On the EU side, it plans to reduce the duty-free quota for steel by 47%, raise the tariff for exceeding the quota to 50%, and strengthen origin verification, which is expected to increase China’s export costs to Europe by about 12%. Faced with policy pressure, some Chinese steel companies have turned to third countries for transshipment, such as reprocessing and exporting through Vietnam or Malaysia, but the operating costs have increased by 15% -20%

Facing the risk of delayed logistics delivery. In addition, the Indian government has recently implemented safeguard measures on imported steel, imposing a 15% surcharge, further exacerbating regional trade fragmentation.

Regional demand differentiation is evident, with emerging markets becoming growth engines:

Despite the sluggish traditional markets, demand in emerging markets such as the Middle East and South Asia is showing resilience. Infrastructure investment in the Middle East remains high, with steel imports driven by Saudi Arabia’s “New Future City” project and the expansion of clean energy infrastructure in the United Arab Emirates. China’s exports to Saudi Arabia and the United Arab Emirates increased by 24.5% and 10.7% respectively in the first three quarters, with high-strength construction steel accounting for 45%. India’s steel exports have performed outstandingly, with a total export volume of 1.07 million tons in September, reaching an 18 month high, mainly benefiting from the demand for energy infrastructure reconstruction in Europe. At the same time, there have been structural changes in the South American market, with production cuts in Brazil’s Vale pushing up iron ore prices and steel production costs. However, the recovery of the local automobile manufacturing industry has driven up demand for sheet metal.

The coexistence of industrial chain costs and inventory pressure has narrowed the profit margin of enterprises

The fluctuation of upstream raw material prices exacerbates cost pressure. Australian iron ore prices were affected by supply disruptions, with a month on month increase of 8% in September. Coke prices rose by 12% due to China’s environmental restrictions, driving up steel production costs. Combined with weak demand, the profit margins of steel companies continue to shrink. In terms of inventory, the stock of steel billets in major ports in Southeast Asia increased by 28% compared to the same period last year. Traders reduced prices and promoted sales to reduce inventory, but the effect was limited.

The European and American markets are also facing similar difficulties, with steel mills in the Midwest of the United States extending their inventory turnover days to 60 days, forcing European steel companies to reduce production to cope with high inventory.

Industry response strategies and future prospects:

Faced with complex situations, steel companies are accelerating their diversified layout. Top Chinese steel companies are increasing their efforts to expand into the Middle East and African markets, enhancing their local supply capabilities through joint ventures, technology exports, and other means. South Korea’s Pohang Iron and Steel is accelerating its green transformation and expanding its hydrogen metallurgical capacity to cope with the European Union’s Carbon Border Adjustment Mechanism (CBAM). Indian steel companies are enhancing their competitiveness through mergers and acquisitions, and the merger between Jindal Steel and Tata Steel is expected to land by the end of the year, creating a regional giant.

Prediction of future trends:

The short-term market will still be constrained by high inventory and trade barriers, and prices may continue to fluctuate downward. But the demand for infrastructure in the Middle East and South Asia, as well as the recovery of emerging economic systems, provide growth momentum for the industry. Long term attention should be paid to three major variables: firstly, the global economic recovery process. The IMF predicts that the global economic growth rate will rebound to 3.2% by 2026, which may drive the recovery of steel demand; The second is the evolution of trade policies, the adjustment of tariffs between the United States and Europe, and the progress of regional trade agreement negotiations; The third is the impact of green transformation. The implementation of the EU CBAM and the carbon neutrality targets of various countries will reshape the industry’s cost structure and competitive landscape. Industry analysis generally believes that companies with cost advantages, supply chain resilience, and green production capacity are expected to take the lead in the next cycle