UK analysts from engineering company MEPS note that global steel price sentiment is showing signs of weakening. Steel demand and prices are falling in China and Turkey. This, in turn, lowers the cost of basic raw materials for steel production, such as iron ore and ferrous scrap.
Against the background of slowing growth in the global steel market, analysts are questioning the possibility of a further increase in the value of steel deals in Europe and North America.
In early January, steel prices continued to rise, continuing the sharp rise seen throughout December. However, over the past couple of weeks, global sentiment has changed dramatically.
It was inevitable that the rally in prices would eventually end. However, many market participants in Western countries believed that the peak of the cycle would not be reached at least until mid-2021. Now it seems that the price bubble will burst much earlier than previously thought.
Whether the global decline in prices is temporary or the beginning of a prolonged downward correction may largely depend on conditions in the Chinese steel market in the post-Lunar New Year period. Traditionally, demand grows in Asia towards the end of the first quarter and the beginning of the second, after the Spring Festival.
Currently, many market participants doubt that the Year of the Bull will start with a bullish movement. Instead, bearish sentiment is increasingly dominating, British analysts conclude.
