MEPS researchers have identified five market trends and influences that are likely to play a key role in shaping steel supply, demand and prices in the coming year. Among them:
1. Chinese Economy
The recovery of China's struggling real estate sector and the success of the Chinese government's stimulus measures will play a key role in the level of domestic steel demand in the country. Strong demand in China will lead to higher prices for steel products around the world, as well as for raw materials such as iron ore and coking coal.
2. Middle East Conflict
Steel suppliers in Turkey and Russia - Israel's main sources of steel imports - are not the only ones feeling the effects of the unrest in the sector. Although the risk of rising oil prices has so far proven unfounded, attacks on ships bound for the Suez Canal are driving up transport prices.
3. Strengthening trade protections
US Section 232 import tariffs, EU CBAM and the so-called low-emission Steel Club planned by the EU and US are among the measures that impose trade restrictions on steel imports. As the threat of tariffs from major steel consuming markets increases, so does the likelihood of retaliatory action.
4. Consolidation of European steel production
Steel producers are looking to match capacity with demand after the eurozone economy slows in 2023. Efforts are also underway to meet the financial needs of the transition to zero carbon emissions. Steelworkers will play a key role in the European Union's Fit for 55 plan to reduce greenhouse gas emissions by 55% by 2030.
5. Market-boosting interest rate cuts
The global steel sector tracks inflation as a key indicator of economic sentiment. Most market participants believe that lower inflation will lead to lower interest rates, which will increase demand for steel. However, the realization of any meaningful market upturn as a result of this shift will likely extend beyond the end of 2024.
MEPS Comments
Commenting on market trends for 2024, Head of Pricing at MEPS International Kaye Ayoub said: “After a difficult 2023, the global steel market will face challenges again this year. End-user demand is expected to remain weak in the first half of the year, but there is more optimism in the second half.
