CRU: Steel trade protectionism is on the rise

Steel prices in the Asia-Pacific region continued to weaken overall in the past month, as prolonged weakness in steel demand and oversupply intensified the downward pressure. The CRU China export price index was down 2.6% m/m for HR coil and 1.1% m/m for rebar. Demand in China remained depressed due to inclement weather and low market confidence towards the near-term outlook. Nevertheless, since late August, as the new rebar standards were gradually digested by the market, infrastructure funding has improved. For flat steel, local demand remained weak due to the underperformance of key end-use sectors such as the automotive industry. Meanwhile, steelmakers have kept production rates high despite negative margins to maintain their market share.

The resultant oversupply has caused Chinese export participation to rise and has been the key reason for steel price declines across Asia. Japanese sheet export prices are down by $50 /t m/m, while Indian export prices are down to a 52-week low. Meanwhile, Southeast Asian prices are now close to a cost floor. The consequent thinning of profit margins for steelmakers has prompted governments to act. For instance, anti-dumping investigations on HR coil imports are now underway in Vietnam and India.

EU prices plummet while the US launches a new trade investigation

In Europe, insufficient local demand amid strong supply availability has kept steel prices (for both longs and flats) on a downtrend, contradicting seasonal expectations. As some import options are priced closely at local European levels (upon delivery, customs clearance and duties applied), interest from European consumers remained low, given longer lead times and safeguard quota risks. The ongoing anti-dumping investigation into HR coil imports launched by the EU has not yet impacted regional prices, although caution among buyers of imported steel has increased.

In the US, four steelmakers filed a petition with the Department of Commerce on Sept. 5 that seeks to impose new tariffs on coated flat-rolled steel from ten countries. The petition includes zinc and aluminum-coated steel sheet products, such as HDG coil and aluminized sheet products. The alleged dumping margins vary greatly but are sizeable in all instances. Commerce is scheduled to make a decision on whether to initiate the investigations on Sept. 26, with a preliminary determination of injury from the US International Trade Commission due on Oct. 18. Final rulings are expected by October 2025. HDG import offers to the USA have pretty much evaporated. (For additional information, see the recent CRU Insight following the initiation of this investigation.)

Steel demand in the US remained modest, and buyers preferred local sourcing for reasons beyond the trade investigation. Ongoing mill maintenance outages have slightly tightened the domestic supply-demand balance, and this has restricted declines in prices of steel, scrap, and pig iron. Brazilian slab export prices have been stable m/m despite the reduction in exports to North America following the July upsurge due to a supply outage in Mexico.

This article was first published by CRU. To learn more about CRU’s services, visit www.crugroup.com.