MEPS NORTH AMERICAN AVERAGE STEEL PRICES SET TO DECLINE IN SECOND HALF OF 2010

HOT ROLLED COIL

Although US transaction prices have started to erode this month, some mills are still claiming full order books. Nevertheless, buyers appear to be more reluctant to subscribe to the ever escalating demands of the producers. Canadian customers are not too optimistic about the strength of real consumption but, overall, mill business is considered to be satisfactory. However, buyers note that delivery lead times for this product are not extending. Transaction numbers appear to have reached a plateau for the time being.

HOT ROLLED PLATE

In the US, energy projects are busy, line pipe business is subdued but due to pick up shortly and the water transmission sector is satisfactory. The structural plate market is buoyant with barges, mining and speciality forestry equipment performing particularly well. However, service centres report that few segments for commodity material are exhibiting any real strength. Transaction numbers continue to head up and are expected to hold through July. In Canada, overall plate demand is picking up only marginally. The bridge building and wind tower industries are perhaps the best achievers at present. Customers have refused to concede a proposed increase during recent settlements.

COLD ROLLED COIL

US transaction figures are relatively flat, although the mills are pushing for rises. Service centres continue to keep stocks as low as possible in anticipation of a price reversal because demand is not strong enough to support the current rate of increase. This is probably the best performing strip mill product in Canada at present and demand has been sufficiently brisk to drive transaction values higher. However, a number of distributors believe that prices may be nearing the top for this cycle. Import offers are in line with or more expensive than, domestic ones.

COATED COILS

The US auto sector is very strong. Mills report a greater number of orders from the domestic appliance makers. Hot dipped galvanised coil is the only one of the strip mill products to advance the full amount of the steelmakers' latest round of proposed increases. Electro-zinc coated coil figures have gained only $US20 per tonne. Canadian automotive demand is solid and improving. This trend is expected to continue in the short term. However, other end-user markets are slow, with customers ordering cautiously. There have been some import offers but very little of real interest. Distributors describe their inventories as "healthy". Transaction values have hardened, with buyers agreeing a rise of two percent.

WIRE ROD

Supply is tight in the US but no shortages are reported. Although the price tendency is, once more, positive, the rate of escalation has slowed dramatically. The number of import offers has grown. In Canada, current spot numbers are $C20 per tonne above the April level. However, business conditions are lacklustre.

MEDIUM SECTIONS AND BEAMS

Nucor-Yamato decided to hold May transaction figures steady in the US, amidst dismal consumption caused by an ailing non-residential construction sector. Prices are static in Canada, where customers are maintaining inventories at a low level because they can see no significant change in demand in the near-term.

REINFORCING BARS

In April, the US producers decided that there would be no changes to transaction values for May shipments. Sales have failed to resurge. The further upward movement in prices recorded this month in Canada is certainly not demand driven. Customers believe that some reductions could take place later in the year.

MERCHANT BARS

Due to muted activity, US steelmakers announced last month that they would roll over the current prices for May business. This policy of "no change" is likely to continue into June. Canadian demand is feeble. Transaction values have trended upwards over the last month but observers expect little further movement in the near term. Although some imports are available, prices are not attractive.

Source:

• MEPS - NORTH AMERICAN CARBON STEEL PRICES

• MEPS- International Steel Review

• MEPS - ALL CARBON STEEL PRODUCTS COMPOSITE PRICE & INDEX

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