Latest Supply/Demand Roundup of Hot Rolled Coil From MEPS

The European hot rolled coil market is quiet. Despite customers holding relatively low inventories, they remain cautious about purchasing beyond their immediate requirements. The approaching holiday period is likely to lead to a further softening of activity. Nevertheless, producers have been operating at high utilisation rates in the first half of the year and the total annual figure could exceed 31 million tonnes.

MEPS continues to anticipate a decline in hot rolled coil production in Japan this year. The outturn could fall by 1.5 percent year-on-year. Some recovery is forecast in 2012. New capacity has been brought on stream in South Korea. A significant increase in output is predicted in 2011.

During the second trimester, supply of hot rolled coil by Chinese producers increased marginally on the figure recorded in the same period in 2010. This pattern was due, in part, to maintenance work at a number of mills. Additionally, more of this material was being diverted to produce downstream, cold rolled and coated products. Output has started to fall as hotter and wetter weather reduces steel consumption during the summer months. A modest, quarter-on-quarter, reduction is anticipated in the third trimester.

In Brazil, imports are predicted to record a significant drop this year due to increased domestic supply and more competitively priced offers. Production of hot rolled coil could exceed 7 million tonnes in 2011. US based distributors fear that reluctance on the part of producers to cut output will lead to oversupply. Shipments could exceed 21 million tonnes this year.

Source: MEPS - World Steel Outlook - Also see HRC data here - and MEPS Reports Online