World Steel, USA
Comments of particular interest are noted with ‘*’.
Geopolitical factors continue to drive uncertainty in global investment and industrial markets. However there are signs that some of the key factors: Trade / tariff wars, and some sanctions may abate in the near term (USA-China, USA North Korea, USA sanctions on Rusal). Others remain: (Venezuela, Brexit).
CRU’s analysis of the iron ore / steel industry highlights China’s structural reform of its steel industry, reducing capacity from 1,250 Mtpa to 1,000 Mtpa but becoming profitable. According to CRU, shifts in demand for steel raw materials will also be driven by forecast increased scrap steel usage in China, offset somewhat by demand growth from SE Asia-Five.
World steel production clearly shows that virtually all the growth in production has been from Asia, rather than the developed world. That is not forecast to change.
Base metals’ fundamentals are tight, and getting tighter, and sentiment appears to be starting to refocus, (or is it just a glance), on the state of supply / demand.
Matau’s expectations are for a broadly sluggish 2019, by weak growth from advanced economies, offsetting growth from emerging economies, with stronger pickup in fundamentals broadly occurring in 2020 (as outlined by OECD CLI). We believe this is influenced also by the fact that most global news systems are from advanced economies, whose own lethargic performances may be ‘news’ ahead of more distant ‘emerging’ economies where the real growth is from. We need to be watching the news from emerging economies: economics, elections, major holidays, political policies and shifts in direction.
We believe much will hinge on when and how the current suite of geopolitical uncertainties are resolved.