01 May Coface estimates that the steel market will be balanced in 2018
Good news for the world’s leading steel company, ArcelorMittal, since is currently in a delicate situation such as is evidenct by the news of its factories in Spain. According to Coface, ArcelorMittal can be optimistic because the steel market will be balanced in 2018.
It is noteworthy that the steel market is the most indebted, has a significant credit risk and is one of the least profitable worldwide. In fact, experts in international credit risk admit that the increase in Chinese exports has made unbalance the relationship between supply and demand. So China places its surplus below its normal price or even for the production cost price.
The Asian giant is the main responsible for the current situation, which manufactures 45% of world steel production. Despite the contraction in consumption in the last two years, its manufacturing has continued to grow. Considering the imbalance, in February the first cut production by 40 million tons was approved.
For this reason Coface predicts that things will return to their site in a couple of years, as long as the Chinese production decreases, the middle class in emerging countries grows and boosts its growth, and the industries whose products are made of steel grow.