In Commodity News 11/05/2015
China has been witnessing a decline in demand for steel in the domestic market which had its repercussions in the global market. The US and the Eurozone markets were especially hurt as a result of the developments in China.
The dip in consumption in the internal markets led to an unenviable situation of surplus in China, the world’s largest Steel producer. The decline in demand for Steel at home is the result of an economic slow down— the slowest in six years.
The situation in China has led to a jump in Steel imports in India. A government data shows that India’s steel imports rose 51.6% to 0.76 million tons in April compared with the year-ago period.
Those within the industry says due to the slow down buying steel from China has become more attractive than making it at home as the former option is more cheap and hence feasible. This is hurting the domestic steel industry.
Steel exports from India during April stood at 0.38 million tons, down 15.2% from a year earlier.
But there is still chance for hope as a report by , Joint Plant Committee (JPC), a unit of the Steel Ministry, says on a sequential basis, the imports declined 9.4% from March this year.
Global scenario
According to Worldsteel, China’s crude steel production for March 2015 was 69.5 Mt, a -1.2% decrease compared to March 2014.
World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 138 million tonnes (Mt) in March 2015, a -2.7% decrease compared to March 2014.
Analysts say the surplus in China may head to critical levels which may potentially drag global prices down.
Financial Review writes that China’s Steel exports stood at 34.3 million tonnes over the first four months of the year. At this rate China is likely to ship 102 million tonnes of steel this year which will be a record.
Upset over the dumping of Chinese Steel in their markets US, Japan and South Korea are planning to impose anti-dumping duty on Chinese imports.
Impact on iron Ore prices
If the slow down in China steel consumption continues for a long time the outlook for iron ore prices may enter negative territory.
According to a report by ANZ(quoted by Bloomberg), Iron ore will average $55 a tonne next year, down from an earlier forecast of $60, and $60 in 2017.
