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Market situation and outlook

The market

According to the World Steel Association (WSA), global crude steel production for 2017 was 1,675 (1,587) million tonnes, up 5.5% compared with 2016. Chinese steel production increased by 6% during 2017. However, the actual increase of steel production is estimated to be clearly below 6%, because some production has moved from illegal capacity (that has been shut down), to steel mills that are included in the official statistics. In the EU-28, production rose by slightly more than 4%, whereas production in North America was up by almost 5% during 2017.

In North America, demand was weak early on in the fourth quarter, but improved as the quarter progressed. Demand increased especially from distributors, whose stock levels were low during the quarter. No decision has yet been taken regarding the Section 232 steel investigation (which could result in further import duties on the grounds of USA security) and there is continued prevailing uncertainty as to if and when further duties or quotas on imported steel could be introduced. In Europe, demand during the fourth quarter continued to be good, however with a certain usual seasonal slowdown towards the end of the quarter. Stock levels at distributors in Europe are considered to be in balance.

Taking the year as a whole, demand in North America was volatile, with a strong start to the year followed by a sharp mid-year slowdown. This was followed by a period of weak demand, which subsequently improved towards the end of the year. Demand in Europe was considerably more stable throughout the year, with slight demand growth.

In North America, market prices for heavy plate decreased somewhat early on in the fourth quarter, but rose sharply during the second half of the quarter. In Europe, market prices for strip were stable during the fourth quarter, but decreased for heavy plate. In China, market prices for both strip and heavy plate rose during the quarter.

Market outlook

In North America, demand for heavy plate is expected to be good during the first quarter of 2018. Similarly in Europe, demand for strip and heavy plate is expected to remain good. It is anticipated that the underlying demand for high-strength steel will continue to show positive development. Shipments by SSAB Europe and SSAB Americas during the first quarter of 2018 are expected to be somewhat higher than during the fourth quarter of 2017, whereas shipments by SSAB Special Steels are expected to be stable. It is anticipated that overall the prices realized during the first quarter by SSAB’s three steel divisions will be somewhat higher compared with the fourth quarter of 2017, although this impact will to a certain extent be counteracted by higher raw material costs.