UOB Kay Hian Malaysia Research sees a brighter outlook for the cement and steel products in the second half of 2019, underpinned by higher average selling prices (ASPs) folowing the consolidation in the industry and more construction activities.
SINGAPORE: One of the world’s top steelmakers is tracking this week’s high-stakes trade talks in Washington, forecasting that a failure by the U.S. and China to make progress to end their prolonged stand-off risks undercutting steel demand as mainland manufacturing would likely take a hit.
“If it doesn’t get sorted out by the day after tomorrow, then we can see less demand from China,” Ranjan Sinha, director of raw materials and IT procurement at Tata Steel Europe Ltd., said in an interview in Singapore. Tata is Europe’s second-largest steelmaker.
The U.S. and China hold a critical round of trade talks in Washington on Thursday and Friday, with negotiations taking place after a threat from Donald Trump of further significant tariff hikes on Chinese imports.
The risk of a further escalation in tensions between the two largest economies has spurred losses in equity markets.
Still, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon puts the odds of the two sides reaching a deal at 80 percent.
Iron ore, which has surged this year on supply disruptions, may also drop over time if events in Washington turn out badly, according to Sinha, who’s based in the Netherlands.
“If there’s a negative outcome from trade talks, then we believe there will be a downward pressure on iron ore,” he said.
China is the world’s largest steel producer, and trends in that nation in pricing and demand to shape the global market.
Earlier this week, ArcelorMittal said that it will lower its European production in response to weakening demand and rising imports, the latest indication of growing pressure. - Bloomberg
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