Steel prices have been on a tear since November. However, prices came under pressure in early February.
After having lost some ground over the past month, U.S. steel companies now seem to be pushing for another round of price hikes. But, can U.S. steel prices rise from current levels?
In February, new findings by Greenpeace East Asia and Chinese consultancy Custeel stated that despite China’s high-profile efforts to tackle overcapacity, China’s operating steel capacity increased in 2016, according to Reuters. The report “suggests that 73% of the announced cuts in capacity were already idle — in other words the plants were not operating. Only 23 million metric tons of cut capacity involved shutting down production plants that were operating,” according to the Washington Post. For 2016, China saw a net increase of 37 mmt of operating capacity, according to the Greenpeace East Asia/Custeel report.
According to data released by the World Steel Association, China’s January steel production rose 7.4% to 67 mmt while global steel production rose 7% from a year ago.