Go to List

How did global steel market perform in CY'23? Cautious optimism seen in CY'24

...

Finish Flat
By
775 Reads
21 Dec 2023, 09:56 IST
How did global steel market perform in CY'23? Cautious optimism seen in CY'24

  • CY'23 was marked by price volatility, China output cuts from Jun'23 onwards

  • Prices show increase for early CY'24 shipments

  • Trade flows may be volatile amid geo-political tensions

Morning Brief: The global steel market in 2023 saw a mixed trend, marked by disruptions, price volatility, and evolving macro dynamics. While the year started on a sluggish note, the latter half witnessed a resurgence, driven by a combination of factors, setting the stage for a potentially brighter 2024.

Key trends in CY'23 that impacted global steel market

Prices see year-end upward trajectory: Global steel prices fell y-o-y in CY'23. China's benchmark HRC FOB offers fell 16% y-o-y, Japan's 13%. Black Sea billets FOB dropped 9% and rebar, FOB Turkiye, by 14%.

But prices showed an uptrend in December as all major mills across the globe hiked prices for their shipments over January-March, 2024 in the range of $25-30/tonne (t).

Currency fluctuations: Robust US economic data and slowing of major economies pushed up the dollar in CY'23. All major currencies, including the Chinese RMB, Turkish lira, Pakistani rupee, Bangladeshi taka fell against the dollar.

Energy prices: As per Eurostat, energy prices are starting to stabilise but remain high with large discrepancies between countries. The World Bank expects energy prices to rise 11% in CY'23 against the 60% surge in CY'22.

Raw material prices: Raw material prices eased somewhat amid lacklustre global demand. Benchmark Fe62% fines, CFR China, eased a mere 1% y-o-y to $119/t ($120/t in 2022) in 2023 but premium HCC coking coal CFR India dropped 20% to $310/t ($386/t).

Russia-Ukraine war: While the war disrupted supply chains and increased energy prices, its direct impact on the steel market was limited. However, the broader economic repercussions, like inflation and global uncertainty, continued to play a role in increasing market volatility.

China's production cuts: This was the most significant event impacting the global steel market in 2023. The production cuts seen from Jun'23 onwards not only tightened domestic supply in China but also sent ripple effects through the global market, pushing up prices and influencing other major players. However, during January-November 2023 total output increased by 1.5% y-o-y to 952.14 mnt.

US interest rate hikes: The US Federal Reserve's aggressive interest rate hikes strengthened the dollar, making steel and scrap imports more expensive for some countries and impacting global trade.

EU trade barriers: The European Union implemented trade barriers on certain steel products to protect its domestic industry, further impacting global trade dynamics. It decided against early termination of steel safeguard measures.

CBAM: The process started for implementation of the Carbon Border Adjustment Mechanism (CBAM), a proposed EU policy taxing carbon emissions embedded in imported goods.

Looking ahead to 2024

Price uptrend may sustain: The price uptrend seen in December 2023 is expected to continue in the first half of 2024, supported by China's production cuts and higher domestic demand. However, uncertainties remain, including the potential for a global recession and easing of production cuts in China later in the year. Cautious optimism may mark the year.

Demand to remain stable? Demand is expected to remain stable in key sectors like construction and infrastructure, although some weakening could occur in other areas due to the global economic slowdown.

Trade flows to be volatile: Global trade flows are expected to remain volatile due to ongoing geo-political tensions and protectionist policies.

China's steel exports next year may fall but will not be less than 80 mnt. If 2023 levels of around 90 mnt sustain, this would be impressive. But some months can exert supply glut pressure on the domestic market.

2nd India Steel and Metal Conference: Keeping above dynamics in mind, SteelMint, along with the Steel Users Federation of India, will be organizing the 2nd India Steel and Metal Conference: Supply Chain & Sourcing Strategies, over 10-11 January, 2024 in Mumbai. Several key sessions will explore the current challenges and enablers. Experts will also try to read future trends.

Particularly, a session on "Evolving trade dynamics in a fast-changing global steel market", will discuss tightening of quality parameters for imports; give an overview on the carbon pricing mechanism and its impact; explore energy prices and their impact on steel; dwell on Chinese property sector woes; and a lot more.

This is the only conference focusing on steel end-user industries and their issues. It will be followed by the glittering SUFI Steel Awards, 2023. Register fast.

21 Dec 2023, 09:56 IST

 

 

You have 1 complimentary insights remaining! Stay informed with BigMint
;