Global steel market in October 2024
by: Artem Segen
Steel prices in October declined again in the EU and the US on a monthly average, although it is likely that a price bottom has been reached or will be reached soon, according to market sources. The Chinese government’s stimulus to the domestic economy was reflected in higher steel prices and higher commodity prices. The release of the Caixin Manufacturing PMI data on November 1 showed that the index reached 50.3, reflecting the government stimulus that was announced at the end of September. It is too early to tell if China’s manufacturing sector is changing trend, but housing sales in China rose in October y-o-y. Investors are now waiting to see if the proposed legislators’ measures will be adopted this week.
Chinese export HRC prices rose by 12% m-o-m on average in October, but it is worth noting that prices peaked on October 7 when China was on holiday, and from October 8, when the holidays ended, prices started to decline steadily, losing $42/mt until the end of the month.
The impact of Chinese government stimuli on the global steel market is still uncertain. On the one hand, during October, market players both inside and outside China began to doubt the effectiveness of the announced measures. On the other hand, rising prices on the Chinese domestic market in late September and early October reoriented export supplies to the domestic market. Thus, the pressure of steel spoilage in the EU and the US from Asia has significantly weakened.
The increase in iron ore prices in China is reflected in the growth of iron ore prices in other regional markets. At the same time, steel scrap prices in the EU and the US remain low, so the Chinese factor only partially affected the cost of steel production in the EU and the US.
Oil and gas prices fall on growth fears and ample supply
Over the week up to November 1, crude oil prices again declined markedly. The chief drivers behind the decrease were concerns about oil demand growth, with OPEC lowering its global oil demand growth forecast for the third consecutive month. Additionally, there have been concerns about demand from China, with growth in the country reportedly below expectations. For instance. Manufacturing activity slumped into contraction territory in September, lowering forecasts for oil demand in the country.
Although tensions in the Middle East supported oil prices, the limited nature of Israel’s retaliation against Iran last week (insofar as the attacks did not target oil facilities) lowered worries of a prolonged conflict and the associated supply concerns.
Gas prices in Europe fell in the week ending November 1 with market sources reporting that supply is ample. The 90% storage filling target in the region was achieved in August. In the US, weekly gas stocks are comfortably above the five-year average, resulting in a well-supplied market. Like the crude oil market, the apparent cooling of the Middle East conflict last week following military-specific attacks by Israel on Iran had a bearish impact on prices.
For reference, the Brent crude oil (DH-0) price fell 3.9% w-o-w to $73.10/barrel. Meanwhile, the natural gas TTF NL (DH-0) price decreased to €32.82/MWh, down 9.3% w-o-w. In the US, the natural gas NYMEX (DH-0) price was $2.66/10therm, a 3.9% w-o-w increase. The European electricity index rose by 8.2% w-o-w to €96.62/MWh.
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