The rally in steel prices has further to run due to China’s crackdown on output and “unprecedented” conditions for synchronized global growth, according to the managing director of Japan’s biggest producer of recycled steel.
China’s benchmark for hot-rolled steel could approach $800 a metric ton this year, a level that would be 25 percent higher than current prices, said Kiyoshi Imamura of Tokyo Steel Manufacturing Co., even after more than doubling in the past two years as top producer China cut capacity.
“I’ve been working in the steel industry for nearly 40 years, but I’ve never seen such simultaneous worldwide economic prosperity,” Imamura said in an interview in Tokyo this week.
China’s environmental clean-up, which involves shutting polluting and inefficient mills, combined with booming demand, will keep its exports under control, Imamura said. Chronic oversupply in China crashed the global steel market in 2015, drawing fire from world leaders who said the nation wasn’t doing enough to fix the global glut.
South Korea’s Posco reported earnings on Wednesday that suggest global steel companies are due another round of bumper profits. China’s biggest mill, Baoshan Iron & Steel Co., followed Thursday by saying it expected net income to more than double when it reports 2017 earnings.