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Market situation and outlook

The market

According to the World Steel Association (WSA), global crude steel production for the first five months of 2018 amounted to 729 (699) million tonnes, up 4.3% compared with the same period in 2017. Chinese steel production increased by more than 5% over the same period compared with the first five months of 2017. Steel production in the EU-28 was up by just under 2%, whereas production in North America rose by more than 3% during the first five months of the year.

In North America, demand remained strong during the second quarter. The second quarter saw further clarifications emerge regarding the so-called Section 232 investigation on US import tariffs of 25% on steel, with the removal of the earlier EU-28 exemption. Around 90% of the volumes SSAB sells in the USA are produced locally, with the remainder exported from Europe by SSAB Special Steels and SSAB Europe. It is still unclear as to which extent product exemptions from the tariffs can be granted.

In Europe, good demand continued during the second quarter and stock levels at distributors are considered to be in balance.

In North America, market prices for heavy plate continued to rise somewhat during the second quarter following the steep rise seen during the first quarter. In Europe, market prices for strip and heavy plate decreased somewhat during the quarter. In China, market prices for both strip and heavy plate rose during the second quarter.

Market outlook

In North America, demand for heavy plate is expected to remain strong during the third quarter of 2018. In Europe, a certain seasonal slowdown is expected during the third quarter, although underlying demand is good. The underlying demand for high-strength steels is expected to remain strong during the third quarter, albeit with a certain seasonal slowdown. For SSAB Americas, somewhat higher shipments are expected during the third quarter compared with the previous quarter. Shipments for SSAB Europe are expected to be lower and shipments for SSAB Special Steels are expected to be somewhat lower than during the second quarter of 2018, following the normal seasonal pattern in the European markets. Prices realized during the third quarter are expected to be higher for SSAB Americas and SSAB Special Steels, but to remain relatively unchanged for SSAB Europe.