INTERNATIONAL
STEEL MARKET ROUNDUP - February 2005
This
article has been extracted from the January 2005 issue of MEPS International
Steel Review
FLAT PRODUCTS
Both US end users and service
centres continue to be overstocked as we move into 2005. Consumption
has failed to recover, partly because consumer durables' demand is
sluggish and auto companies' inventories of unsold cars and trucks
are high. Despite attempts by the mills to hold onto strip
transaction prices, we have noted further weakness in the cold
rolled and galvanised product categories.
There are few transaction
price changes to report in Canada. However, the level of activity is
down and customers appear to be very cautious about ordering.
Prices of domestically
produced Chinese flat products continue to show an overall upward
trend. Export volumes are rising whilst the import trend is
negative. The supply/demand balance for strip products is very tight
in Japan and is expected to remain so throughout the first quarter.
Carmakers are sucking in large quantities of material, leaving less
and less for the distribution sector. Consequently, stock levels are
low and domestic mill prices continue their upward tendency.
Inventories of imported steel at the ports, at end November, rose by
11.1 percent compared to October - the first increase in two months.
South Korean service centres
have imported large tonnages of strip products, particularly coated
coil, in recent months because domestic supply was inadequate.
However, the economy is slow and, therefore steel sales have been
sluggish. Inventories in the distribution sector are now too high
for current demand. Direct mill business is still strong, and Posco
is expected to lift prices during the early part of the year. Demand
in Taiwan is fair but many observers believe that, in the short
term, it will weaken.
Average EU flat product prices
rose by less than 1 percent in January. This is substantially below
our expectations. The threat from imports, discussed in the previous
issue has materialised. The mills were unable to reach their target
increases for most customers because inventory levels are now
sufficient for current activity. In Poland and the Czech Republic,
flat product prices are still moving upwards. All the mills are
reported to have good export order books.
LONG PRODUCTS
US demand continues to hold up
fairly well for the time of year. Weakness of the US dollar should
deter imports which have kept the lid on transaction prices.
Canadian construction activity is dull. The mills continue to fight
hard to maintain transaction values.
Chinese prices of construction
steel have started to inch up, despite the very cold weather in some
parts of the country limiting building activity. Construction has
also slowed in Japan for seasonal reasons.
The South Korean construction
sector continues to contract, leading to a soft market for long
products. The civil engineering market in Taiwan is very weak.
Building is holding up a little better.
Long product prices in the EU
have fallen sharply since our last investigation in December. A drop
in the price of scrap in recent weeks has been the main influence in
this trend. Bar and rod prices have fallen in the two new EU
entrants, reported in this report, over the past month. The onset of
Winter weather and only modest construction growth have impacted on
selling values.
