Posted on 07/02/2017 in category Ferrous

BIR World Mirror on Ferrous Metals / Quarterly report - February 2017

by William Schmiedel, Sims Group Global Trade Corporation

Volatile landscape lies ahead in 2017

As we go into a new year, it is always interesting to look in the rear-view mirror to see what we have gone through. Certainly 2016 could never be described as “sweet 16” as it was a year of heightened volatility and increased risk.

Chinese steel demand growth was stronger and capacity closures more aggressive than anyone may have anticipated. For instance, the Chinese government’s action in November to close all induction furnaces created quite a ripple through the country’s futures and other related markets.

While it is always good to hear of production rather than capacity cuts, the closure of these furnaces will take some time - partially because the government does not know how many there really are and also because local governments support them for employment and tax base purposes. Throughout 2016, the Chinese tightened controls for various reasons, including environmental, and forced steelmakers to idle capacity in order to avoid fines.

However, as soon as the central government loses its focus and moves on to something else, the mills increase production in order to maximise profitability (...)

Read the full world market report in our members' area.