After suffering for some seven years through to 2015, the world’s steelmakers have had cause for cheer over the past couple of years. Following some heavy losses and write-downs, they finally appear to have emerged from the wreckage of the global financial crisis. An economic upswing has taken root in most regions of the world, Chinese steel output and export growth has slowed noticeably, and steel prices have enjoyed an upward swing in consequence.
In a previous article, we discussed how the real prices of commodities tend to fall in the long term (i.e. once adjusted for inflation).
While there are a number of factors contributing to this, perhaps the most important is that of technological advance.
A recent article in The Economist highlights this argument with regard to the steel industry. The article discusses the growing application of two different steelmaking techniques – Castrip and Belt Casting.
After having gone after imports of both hot-rolled coil (HRC) and cold-rolled coil (CRC) this year, will the European Commission soon be turning its attention to imports of galvanized steel? (primarily hot-dipped galvanized material (HDG))
In all likelihood yes but just how effective would any import restrictions be?
Let’s take a look at the case for implementing trade protection measures on these products and what effect they may have.
Just under ten years ago, during June 2006, Mittal Steel finally gained control of Arcelor, creating what in turn is still today the world’s largest steelmaker, ArcelorMittal.
Mention the Spanish stainless steel industry and one is likely to think first and foremost of Acerinox, one of the world’s largest stainless steelmakers with production facilities not only in Spain, but also in Malaysia, South Africa, and the USA.
Spain is also home to another world leader when it comes to stainless steel products, however. That company is Tubacex, the focus of this article and the world’s largest producer of stainless steel seamless tubes.
In the previous article we took a look at a handful of commodities and compared their current prices to those seen back in 1995.
In this article, we take a longer-term look at a wider range of commodities to see just how prices now compare in real terms to those in the (very) long term.
Last year was once again rather disastrous for commodity prices. Average prices of the base metals traded on the LME all dropped massively, while average prices of oil, iron ore and steel also fell sharply. The general downward trend that has been in place since 2011 continued.
With prices of many commodities at multi-year lows, recent financial releases from some of Europe’s major steelmakers delivered a reminder that not everything is bad in the steel industry.
Why, when most stories surrounding the steel and commodity markets are overwhelmingly negative these days, might this be the case?
With a population equivalent to just 3% of the eurozone total, and with public debt equivalent to just 3% of eurozone GDP, the concern regarding the ongoing financial crisis in Greece in recent weeks perhaps seems out of proportion.