Source: The Financialist
Steelmakers had a rough go of it the last few years. Lower global demand sent the global export price of the metal alloy crashing from an average of $677 a tonne in 2011—already down from the $853 high in 2008—to $346 in 2015, prompting steelmakers to slash inventories. Credit Suisse’s Global Markets analysts say the great global destocking appears to have ended in 2016, however, and low inventories, coupled with greater demand in China and relatively restrained production growth, lifted steel prices from a low of $255 per tonne in January 2016 to $388 in September. Steel prices are also getting a boost from inflationary price trends in raw materials such as coal, iron ore, and scrap steel. “The correlation of the sector with the underlying price of raw materials says it all to us,” the Global Markets analysts write in a recent report. “Inflation is positive and deflation is negative, and the deflationary spiral of 2011 to 2015 appears to have come to an end.” Credit Suisse expects the price stability to extend into 2017.