[Ferro-alloys.com] Severe coil shortages in Europe and the United States have caused steel prices to rise to their highest levels since 2008, and have attracted export interest from Asian steel mills, and this situation seems unlikely to change until steel production rebounds in the second half of the year, which means the second quarter. It will bring good opportunities for steel exports.

Since the beginning of this year, the ex-factory prices of HRC in the Midwest and Northern Europe have soared. The delivery time of these two markets is full, and many customers cannot get the steel supply in time.

The shortage of semiconductor supplies has led to a reduction in US automobile production. Therefore, automakers believe that the sharp rise in US steel prices is largely driven by insufficient supply rather than demand. In Europe, downstream demand is relatively strong, and deliveries from large steel producers such as ArcelorMittal have been scheduled to October. Steel prices in Europe and the United States are expected to continue to rise in the second quarter. In addition to supply shortages, this is also due to the support of the new crown vaccination, which will help the economy to further recover.

South Korea is exempt from the 25% import tariff imposed by the US government on steel and has been increasing steel shipments to the United States. Japan is affected by tariffs, but has long-term connections with American automakers and other high-end steel consumer customers.

Demand in overseas markets and the rebound in prices have made China's steel products competitive again, so China's steel exports have grown this year. However, China's finished steel exports fell sharply 33.9% month-on-month to 5.271 million tons in May. China's steel exports in 2021 are expected to increase significantly year-on-year.

Since the beginning of this year, China's domestic steel prices have continued to rise and reached a historical peak in mid-May. In addition to strong demand, environmental protection has led to a reduction in production in Tangshan, which has further supported steel prices. However, recently due to the "fear of heights" in downstream industries and the impact of increased national supervision, steel prices have fallen.

The profit margins of Chinese steel mills have been increasing this year. Driven by profits, domestic steel mills are unwilling to reduce production. It is expected that China's total steel output will not drop sharply this year. As the Chinese government's monetary tightening measures begin to take effect, especially in the real estate sector, steel demand will begin to slow in the second half of the year.

India continues to play a greater role in the international steel trade. According to data from the Joint Factory Committee, India’s steel exports from April 2020 to February this year increased by 49.5% year-on-year to 15.5 million tons. Last year, before the economy recovered from the epidemic, India exported a large amount of steel to China and Vietnam. This year, with the widening of the price gap between India and Europe of hot rolled coil and the shortage of steel coil in Europe, India has shifted its export focus to Europe.

A large number of exports have caused a shortage of domestic steel supply in India, and the maintenance plans of Jingdler Southwest Steel, Tata Steel and the Steel Authority of India will exacerbate this situation. The imbalance between supply and demand has led to further increases in domestic HRC prices in India in April and May. However, this situation will begin to ease with the arrival of the monsoon season, because downstream industry activities will slow down by then. 

• [Editor:zhaozihao]