8 January 2018
- We see short-term supply conditions as marginally bearish. Mill re-stocking turned weak which, along with tightness in spot supplies, is a negative price development. However, we observed upsides on the supply front with lower than expected imports into China as well as forward supplies.
- We see short-term demand conditions as outright bullish. The main drawback is the sharp decline in margins observed in recent weeks. Steel rates have stabilized and have inched up slightly since the last update. Both our domestic vs. imported ore arb. and cash and carry arb. indicators continue to reflect positive price developments.
- Short-term macroeconomic conditions are marginally bullish. Downstream steel demand remains mixed with our Re/De-Stocking Cycle Index cancelled out by the expected slowdown in construction demand. While short-term credit conditions look to tighten, the supportive Currency Impact Index (led primarily by the weakness in the US dollar) continues to suggest positive price developments.