Steel demand across the globe improved in April amid betterment in the global economic conditions in line with ongoing trade-talks between the two significant economies of the globe, to end the long disputing bilateral disagreement. The progressive trade talks improved the economic conditions of both China and the United States, who are among the top steel consumers, with China being a top producer as well.
The improvement in the economic conditions was reflected by the development in the manufacturing activities in both the countries along with better job creation in the United States.
China PMI index along with Caixin Manufacturing index both climbed above the mean value of 50, which in turn, denoted an expansion in the domestic economy. On the other hand, the Manufacturing Index in the United States also climbed above its mean value of 50 and coupled with the improvement in the job creation signified an economic expansion.
China Steel Market:
Steel prices in China rose significantly in April amid stimuli provided by the Chinese government. Mills across China procured high iron ore, which in turn, coupled with a shortage in supply caused by production loss from Vale, BHP, Rio Tinto, FMG, took the iron ore prices above $92. As a part of government stimuli, the steel demand in China in 2019 is expected to grow further.
On the supply side, steel inventory in China fell in March, and the prices boomed amid high demand. However, mills across China took the opportunity and raised output in April. The increased output of steel in China slightly filled the shortage in both the social and mills steel inventory. However, the steel supply chain in China is still lagging behind the demand. Therefore, the steel supply and demand scenario in China could exert a slight pressure on prices in the coming months, but the demand is expected to absorb the pressure.
World Steel Association SRO and Global Steel Market:
As per the Short-term outlook of the World Steel Association, the global steel demand is expected to increase by 1.3% in 2019, as compared to 2018 and stand at 1,735 million tonnes. The consortium further forecasted the global steel demand to grow by 1.0% in 2020 and stand at 1,752 million tonnes.
The Country wise forecast of the World Steel Association is as:
However, the investors should keep track of a few details, such as the observation on the progressive trade-talks and when will it present any visible outcome in terms of policies. Also investors may monitor the economic indicators such as Manufacturing Index, Consumer Sentiments, Unemployment, etc., to adjust to the volatility that could arise in the steel market time to time amid a change in such economic data.
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