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S&P Global Daily Update

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Market Dynamics

No Decision Yet on Suspension of Chinese Aluminum Import Duty: EU official

No final decision has been taken on whether the European Commission would suspend the imposition of definitive anti-dumping duties on imports into the EU of Chinese flat-rolled aluminum products, an EU official told S&P Global Platts Sept. 13.

"The anti-dumping investigation on imports of aluminum flat-rolled products originating in China initiated on Aug. 14, 2020 is still ongoing. Definitive measures, if any, must be imposed by Oct. 11," the official said in an emailed statement.

However, in the context of this investigation, "a request for the suspension of any measure, triggered by several stakeholders and based on substantiated information on the most recent market developments beyond the period covered by the anti-dumping investigation, is also under consideration and Member States are being consulted," the official added.

A fact finding exercise related to such a request was initiated in July, the official added.

EU producers' association European Aluminium issued a statement Sept. 10 saying that the European aluminum industry "is very determined to pursue all avenues to challenge the proposed suspension because it is fundamentally unwarranted and contradictory to the Commission's trade and climate ambitions."

Iran Steel Export to Afghanistan Halted, May Resume in Weeks: Sources

Iran's exports of steel to neighboring Afghanistan have been suspended amid the current political and logistical turmoil in Afghanistan, Iranian steel industry sources told S&P Global Platts.

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Some U.S. Sheet Buyers Looking for Import Leverage in 2022 Contract Negotiations

Some U.S. steel sheet market buyers were hoping to grow their leverage against domestic mills in 2022 contract negotiations with imports, market sources told S&P Global Platts.

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German Steel Stockholder Kloeckner Sees Strong Market to Persist

German steel stockholder Kloeckner is expecting the current steel shortage and high steel prices across the sector to linger and will continue focusing on a "margins over volume" approach, Kloeckner said Aug. 10.

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China's Steel Output Cuts Continue to Gather Pace in September

China's steel output cuts have gathered pace in September and are expected to widen further in the coming weeks as the country looks to cap 2021 crude steel output and emphasizes on lowering energy usage, sources said.

A few mill sources expected China's steel output cuts to widen further in late-September or October, mainly as the overall cuts by mid-September have remained insufficient to keep the country's 2021 crude steel output within 2020 levels. During January-July, China's crude steel output was 8%, or 48 million mt, higher on the year.

More output cuts are expected to be seen in eastern and southern China in the coming weeks, also because Jiangsu, Zhejiang, Yunnan, Guangxi and Guangdong are still lagging behind their reduction targets of energy consumption.

In tandem with the accelerated steel output cuts, Chinese domestic hot rolled coil sales margins rose 41% to $165/mt on Sept. 13 from $117/mt on Sept. 1. The S&P Global Platts IODEX 62% Fe index dropped 15% to $123/mt over the same period from $144/mt.

China's Steel Industry Consolidation Gathers Pace, to Aid Output and Emission Cuts

China's steel industry consolidation has been showing signs of acceleration in recent months, with seven major merger and acquisition related transactions announced just over July-August, bumping up the share of China's top five steelmakers' output in the process.

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China's Steel Manufacturing Production Index Hits Five-Month Low in July

China's manufacturing production index of steel consumption produced by S&P Global Platts stood at 91 points in July, a five-month low but still 3 points higher than the same period in 2020.

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China Steel Exports Rise Sharply in July; Market Fears Further Policy Tightening

Rising steel exports from China in July have stoked fresh concerns of a possible move to tax such shipments in the near future, sources said.

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Inflation-Stoking Commodity Prices May Weather China Demand Slowdown

The recent surge in commodity prices, which has fanned inflation in the U.S. and Europe, could be sustained by new demand from the Western world just as Chinese requirements start to wane.

Economic stimulus measures, including as much as $4.5 trillion of infrastructure and other spending in the U.S., may help industrial metals such as steel and copper maintain multi-year high prices following a China-fueled spike this year. Progress in COVID-19 vaccinations is also likely to support the global economy and commodities demand, offsetting a post-stimulus slowdown in China, the world's biggest user of raw materials.

U.S. spending "could go a long way to offsetting the weakening in China's demand," Bart Melek, head of commodity strategy at TD Securities, said in an interview. "This could be a pretty robust cycle."

The effects of rising commodity prices have rippled across the world. In the U.S., the consumer price index rose 5.4% year over year each month in June and July as the increase in energy prices and manufacturing costs fed through into U.S. inflation data. Prices rose 2.2% in the EU in July and 2.4% in the U.K. during June, driven by similar pressures.

"Commodities have filtered through directly to consumer prices but also indirectly in consumer goods, while the energy component has been an important factor in CPI," Gregory Daco, chief economist at consultancy Oxford Economics, said in an interview.

Commodity prices will likely only cool a little through year-end, according to an S&P Global Market Intelligence forecast, as infrastructure spending, supply constraints and the shift to renewable energy counter cooler Chinese demand. Global commodity prices are at the highest since late 2014, after surging 130% from a low in April 2020, based on the S&P GSCI index, which tracks a basket of 24 commodities.

U.S. Sheet Contract Talks Off to Slow Start; Mills, Service Centers at Odds

U.S. sheet steel contract discussions for 2022 have been slow to progress as mills look to hit the reset button on discounts and service centers aren't ready to commit to higher prices.

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U.S. Metals End-Users Ask Biden to Drop Steel Tariffs Amid Record Prices

A group representing U.S. metal manufacturers and users issued a statement Sept. 1 calling on President Joe Biden to drop the US Section 232 tariffs on steel imports as domestic prices for hot-rolled coil have continued to reach historic highs.

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U.S. Spread Between Finished Steel and Inputs Seen Widening: Platts Survey

U.S. steel market participants reported firm finished steel price sentiment for September and a more bearish outlook on raw materials, according to the monthly survey of the market by S&P Global Platts.

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EU Steel Buyers Fear Higher Prices Subject to Potential Removal of U.S.' Section 232 Tariff

With the summer slow period on its way out, the European market is looking onwards to a possible settlement of the Section 232 steel tariff dispute on November 1, which could restore the flexibility of vital trade routes between Europe and the US, compliant with WTO regulations.

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Amplified by Tariffs, High U.S. Steel Prices May Collide with Infrastructure Plans

Steel prices in the U.S. are skyrocketing, at least partly because of dwindling domestic production and tariffs on steel imports enacted under former President Donald Trump. The trend could stifle any sweeping infrastructure stimulus effort.

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Sluggish Iron Ore Supply Response Could Hamper China's Decarbonization Drive

The S&P Global Platts IODEX 62% Fe index reached a record $233.10 per tonne May 12, driven by a resurgence in global demand, tightening supply and runaway steel prices. Although prices eased back in July, iron ore and steel will be key beneficiaries of the infrastructure investment drives in both China and the U.S. They will also benefit from the global renewable energy transition over the medium to long term through the rollout of new infrastructure for power generation, electric vehicle charging and high-speed electric rail networks. With a strong global steel production recovery underway, S&P Global Market Intelligence expects the iron ore seaborne trade deficit to deepen in 2021 and persist to 2025.

In this article, S&P Global Platts assesses the impact on the iron ore market of China's intensified decarbonization push and supply diversification, before shining light on the key projects expected to drive the seaborne iron ore supply response in the medium term.

The Chinese steel industry aims to reach peak carbon emissions by 2025 and to achieve a 30% reduction from the peak by 2030. These targets are set in accordance with the country's overall plan to see carbon emissions peak by 2030 and to achieve carbon neutrality by 2060.

The decarbonization push is expected to benefit the direct-feed iron ore products, pellet and lump. Unlike iron ore fines, which first need to be sintered with coke breeze and anthracite coal, direct-feed ores are directly charged to blast furnaces in a process that emits less pollution, including carbon.

EU Steel Braces for Tighter GHG Emission Curbs in Run-Up to IED Review

European Union steel mills may in the future risk having their operating permits removed if they are unable to restrict their greenhouse gas emissions to certain levels, steel industry representatives warned Sept. 8.

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'Green' Steel Label May End Up on Coal-Made Products, Complicating Climate Goals

The world's first label for certified "green" steel may wind up on products made with coal, because technologies to remove the fossil fuel from the steelmaking process are still in development.

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'Gray' Steel to Become Obsolete in EU Once 'Green' Steel Advances: Salzgitter CEO

"Gray" steel will eventually be obsolete in Europe as "green" steel gains competitiveness, Gunnar Groebler, CEO of German steelmaker Salzgitter, a pioneer in the development of hydrogen steelmaking, said Aug. 11.

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As U.S. Government Weighs Carbon Tariffs, Steel Giants Move to Cut Emissions

Titans of the carbon-intensive steel industry are trying to get ahead of potential tariffs as world governments weigh using tariffs to target emissions from the global industrial sector.

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LatAm Steelmakers Push for Firm Decarbonization Agenda After Years of Planning

Latin American steel producers are evaluating decarbonization strategies to embark on a more declaratory sustainable agenda after decades of just making plans, the new executive director for the regional steel association, Alacero, said.

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