Issue 44, 2024 - This week's editorial: Market awaits US, China clarity; US HRC hikes

Market sentiment was more or less upbeat last week amid expectations for positive economic stimulus announcement from this week’s China NPC Standing Committee session. Following the recent experiences of Chinese government meetings disappointing expectations, however, buyers in various markets remained cautious. Another major element of uncertainty came from this week’s much-anticipated US presidential election. Rumours have it that Chinese authorities have designed two stimulus plans, depending on who wins the election. The result will give the steel market some clarity on how US policy will affect domestic investment and global trade over the next four years. In Europe, the doom and gloom continued as Eurofer announced it now expects EU steel consumption to contract this year.

Iron ore prices initially surged last week on the bullish expectations but then fell again towards the end of the week due to rising port inventories amid slowing shipments to cautious mills. Chinese domestic HRC and rebar prices dropped, but only slightly, due mainly to weather disruptions.

This week’s NPC meeting is fuelling expectations for more debt relief measures to bolster the economy. However, even if Chinese authorities announce a substantial sum of stimulus, the measures may not significantly target infrastructure or real estate, as they have done in the past, and therefore not provide much support for steel demand.

The US election result could meanwhile point to which steel items will be winners and losers. If a victorious Trump diverts federal funding from clean energy and other infrastructure in favour of support for oil and gas production, there may be less demand for plate, coated and other flat steel and structural goods, and more consumption of OCTG and line pipe. Harris, on the other hand, is credited with supporting on-going federal investments in public infrastructure, semiconductor manufacturing, data centres and the electric grid.

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