News
Global steel prices are plummeting due to China's real estate crisis and weak global manufacturing, creating an oversupply reminiscent of past market downturns. Chinese construction activity has dropped sharply, leading steel mills to cut production to stabilize prices. Iron ore prices have also fallen, prompting mining companies to reduce output. Chinese steel exports hit an eight-year high in 2024 but face growing international tariffs from the U.S., EU, and Latin American countries aiming to protect their industries. The global transition to green energy adds further challenges to steelmakers, making green steel production costlier.
Context
China’s struggling construction sector, with a 24% drop in new projects in early 2024, has significantly reduced steel demand, driving global price declines. Countries are imposing tariffs on cheap Chinese steel imports to protect local producers, while the push toward renewable energy makes steel production more expensive due to costly plant conversions.
What's in it for me?
For businesses and investors, the low steel prices may offer short-term buying opportunities, but tariffs and the shift toward green energy could disrupt supply chains and increase costs. Manufacturers may benefit from locking in lower steel prices now, but must watch for market stabilization and policy changes that could affect future costs and availability.
Source: Credendo