Steel Prices Pressured by Growing Production
Steel prices were mixed on Monday. In China, the most active rebar contract was trading with a downside bias while in India prices ticked higher although volumes were thin. Steel prices have stabilized from their recent rally amid concerns that global steel production will overshoot demand. In China, steel output increased 6% in January and February, while India is producing a record amount of steel.
According to Bloomberg, citing provisional steel ministry data, India’s steel output in the year through March jumped 11% to 101.3 million metric tons. The increase in output was to meet domestic rising domestic demand, while the country also became a net exporter for the first time in three years. If India continues to ramp up steel production in a few years it could overtake Japan to become the world’s second-largest steel producer behind China.
Meanwhile, in China where steel overcapacity has been the largest price influencer, four major steel producers have signed a framework agreement to establish the country’s first steel industry restructuring fund. The fund, which may be launched in June, will seek to push forward the steel industry’s restructuring. According toReuters, citing Ma Guoqiang, Baowu Steel’s chairman, the fund is tasked to help the Chinese steel industry to “eliminate excess capacity, speed up restructuring, raise industry concentration and promote international cooperation”.
Meanwhile, the key meeting between Donald Trump and China President Xi Jinping is over – and now the markets are awaiting to see if there in any tangible impacts to the global steel market. Trump has been very critical of China’s trade policies, with steel a major focus. According to the NewYork Times, Trump will soon sign an executive order targeting excess steel dumped into the US.