The media are quick to sound a swan song for the commodity and steel markets these days. “Sharp price drops, high volatility, steel exports from China collapse.” Is any of this real? Often, a closer look reveals only a blatant ignorance of the market on the part of the writers of such articles.
Stainless steel futures unchanged at high level
If you take a look at steel prices in Western industrialized nations or at stainless steel futures in Shanghai, it quickly becomes apparent that there is little to no movement here. Occasionally a slight twitch, sometimes down, sometimes up, but no steep downward movements in the price of steel. In the United States, new records in the relevant HRC (hot-rolled coil) price have been reported for weeks. Further price increases, e.g. for plates, are currently expected by manufacturers in the United States. And in Europe, too, prices are at their highest level in more than 13 years and inventories, e.g. in Germany, have been at their lowest level in over 33 years for months.
Availability for steel and stainless steel the key issue
However, real availability remains the overriding issue. This is because exports from China continue to be severely reduced. And this is not due to a global drop in demand but to export restrictions imposed by the Chinese government.
Waiting for the Chinese export tax on steel products
This was observed in May. Not only did the Chinese government reduce sales tax rebates on many steel exports, it also announced that it intends to impose export taxes on steel – in as yet unknown amounts. Until a decision is made here, current steel exports from China in June are unlikely to be much higher than those in May 2021. This may even extend into July.
Global availability of steel and stainless steel is tight
We could be accused of constantly bringing up the issue of availability and scarcity. Even in politics this is now clearly perceived. But in addition to us, more and more industry media and associations are now writing in no uncertain terms about the fact that there is a worldwide shortage of steel and stainless steel.
Chinese measures to reduce capacity, limit CO2 emissions and safeguard the domestic economy (reduction of export rebates, possible introduction of an export tax) are further tightening the global supply of steel and stainless steel.
Steel shortage exacerbated by EU and US measures
This steel shortage has been exacerbated not only by the Corona pandemic but by general structural problems originating in market restrictions imposed by the European Union and the United States, for example. Which the EU and US steel producers are not able (or willing) to solve and in the end is due to their lobbying.
Educate yourself with more than one source. Look at the details. Know your market and don’t be put off by individual “authoritative” media.
- Stainless Espresso: What you really want to know on Monday
- Stainless Espresso: Serious EU stainless steel shortage and no Safeguard decision yet
- Stainless Espresso: EU Safeguards before their end?
We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.
Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.