THE RECOVERY HAS BEGUN BUT OVERCAPACITY HAS NOT YET BEEN REDUCED

With this low level of demand, overcapacities remain high production in China has not yet been cut despite the rhetoric of Chinese

authorities and the capacity utilization rate remains insufficient, at less than 70%.
 
Yet through a finer management of iron ore production, a reduction in the number of hours worked and thus of volume produced, and an

adjustment of high import tariffs against subsidized Chinese steel, steel prices have begun their recovery during the second half of 2016.

After reaching a low point, of around 300 $/T at the end of 2015, the price rose to over 500$/T at the end of 2016 (420$/T yearly average).

We anticipate a stabilization around 500 $/T in 2017 (20% in yearly average) but it remains far below the 700 $/T in 2011.
    METAL SUBSECTORS INSIGHTS
Iron Ore: A reduction in the number of hours worked mainly in China and thus of the volume produced permitted the price rebound.
 
Steel companies: Global overcapacity but the high level of import taxes protects some specific markets such as US and Canada.
 
Non ferrous: Prices remain at a low level, not enough to signal a substantial improvement.