The global longs steel market is now characterized by the slowing down of market activity, even though it had not been too lively previously, due to the approaching holiday season. The short-term expectations are blurred with a lot of uncertainty including political factors, the situation in China and the difficulties faced by the steel industry in the EU. The overall outlook for the first quarter is unstable and uncertain, with competition remaining very tight and being more regional rather than global.
The global markets have been awaiting some clarity regarding the positive sentiment in China, regarding which there has been speculation for a while now. It is not clear if the expectations will be matched by actual market positivity in terms of domestic demand in China at least. The Chinese government has lately pledged that China will meet its ambitious GDP growth target of five percent this year and so no sizeable production cuts may be anticipated. As a result, the price pressure on the main international markets will continue, with suppliers struggling to increase prices.
In Europe, the long steel market has been facing rather slow demand and the local mills have been holding price levels which would be competitive against imports. Further price reductions are limited by the high costs of production, which have additionally been aggravated by the surge in energy prices in Europe. This has been resulting in some shutdowns announced by the mills for the holiday period and beyond, and some producers are working with fewer shifts. However, the stability of domestic prices in Europe ahead of the holiday period is considered by many as a relatively positive sign.
There are also fears that the anticipated change in the US administration may trigger difficulties in the global long steel trade. If some additional duties are imposed, other countries may retaliate, similar to what happened with the Section 232 measures. In the meantime, domestic steel prices in the US have been kept low, while the interest rates have been lowered a little but are still on the high side for investments.