Global Market Outlook on Carbon Steel 

  • Expected increase in downstream to 1,571 MMT by 2018 and the need for cost reduction are the key market drivers 
  • Supply glut, due to Chinese slowdown, has adversely affected the steel market, resulting in cautious market growth

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Steel Market Overview - Global

  • The global steel market is expected to grow at a CAGR of 1–2 percent between 2016 and 2018, owing to sustaining supply glut and curtailment measures by the Chinese steel makers 
  • Construction constitutes to around 36 percent of the steel end use. The decline in commodity prices, along with the surplus market condition in major regions, such North America and China, has adversely impacted the steel prices

Global Steel Drivers and Constraints

Drivers

Downstream Demand 

  • Increasing demand from downstream industries, such as construction, engineering, and manufacturing, will impact the steel market 
  • Construction industry is expected to be the primary driver of steel industry

Need for Cost Reduction 

  • Increased focus on reducing the total cost of ownership of steel making process has led to:

−The adoption of new technologies

−Use of more energy

-efficient fabrication, manufacturing process

Technological Advancements 

  • Development of new technologies is driven by the need to attain low cycle time in the manufacturing process
  • Suppliers in emerging economies are rapidly adopting technologies, in order to improve efficiency and increase production capacity

Constraints

Current Supply Glut 

  • Steel industry has been facing supply glut since 2014, mainly due to fall of demand from the largest consumer, China 
  • China ‘s weak economic growth has impacted the global steel industry and subsequently, the prices 
  • The recent curtailment, globally, and lower production rates are expected to improve the conditions sooner

Lower Profit Margins 

  • For the past 12–18 months, steel suppliers experience lower margins, due to falling prices 
  • Suppliers are also susceptible to commodity price fluctuations, against which, they cannot hedge, due to relatively shorter contract period