One of the most important qualities in the international steel trade is the ability to anticipate and react to a global market that is constantly evolving. New markets are opening up, patterns of production and demand are shifting, and steel products and specifications are changing.
For many years now, we have also seen considerable volatility in steel prices. In 2008, we were selling rebars to Dubai at $1,500 per tonne, but the global economic crisis saw prices collapse in just a few months.
The market has stabilised compared to those days. In the past two years, global steel prices have followed a similar trendline as the low prices for oil and other commodities, with steel remaining below $600-650 per tonne for rebars, the biggest commodity in steel products.
Steel market development
One of the other most significant developments in the steel market is the influence of China. Today, almost all steel market trends are heavily influenced by Chinese economic behaviour. When Chinese domestic consumption is low and it enters the export market, we see steel prices fall significantly. By contrast, when consumption rises in China and it takes a less aggressive role in export markets, steel prices return to more profitable levels.
When it comes to Chinese steel export levels, it is hard to say what a ‘typical’ year is. In some years, steel exports from China might be less than 50 million tonnes, whilst in other years it can exceed 100 million tonnes. These fluctuations have a deep impact on steel price trends and market characteristics. For example, Turkey is a regular exporter of rebars and depends on scrap prices on the supply side of the market, but is also heavily affected by the Chinese export levels on the sales side.
It is amazing to see how much the rules of the market and transaction trends can change on a yearly basis in the worldwide steel business today. Just three years ago, in 2014-15, China exported more than 2 million tons of steel billet and more than 1 million tons of wire rod to the Turkish market, but last year China started importing billet from Turkey, due to the very high level of Chinese domestic consumption.
We don’t yet know what will be next year’s trend, but we can certainly say that steel traders today are hoping that construction activity levels in China do not fall. One of the best ways to ensure that you are ready for whatever the market brings is to have a wide distribution network, in order to help your company adapt to market trends. One year you could be selling Chinese steel to Turkey, or you might find yourself selling Turkish steel to China. With a wide network that gives you plenty of options, you can be prepared for anything.
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