STEEL MARKET ROUNDUP - December 2004
article has been extracted from the November issue of MEPS International
US domestic transaction prices
continue to slide. The market has slowed down. Customers'
inventories are full - service centre stocks at the end of September
were the highest in 17 months. The mills have caught up with order
backlogs. Import volumes are growing. Local producers need tonnage
for December and are discounting accordingly, despite a deep
reluctance to do so. However, several steelmakers are planning
slightly extended seasonal maintenance shutdowns for the
November/December time frame which will take out some capacity and
tighten supply. As market conditions are expected to improve in the
first quarter 2005, this may be just a temporary price adjustment.
We have noted a significant
drop in Canadian mill transaction values this month. Market activity
is subdued. A lot of imports are arriving at very attractive prices.
Those service centres which rely solely on domestic material are
suffering because the price differential can be as much as $C130/240
In China, the strip product
price scene has improved slightly. Import supply is limited as
prices outside the country are high. There is a robust growth in
exports. Domestic demand is still relatively good and availability
is problematic for higher grades and thinner gauges.
There is a shortfall between
Japanese output and demand. Consequently, local producers are giving
priority to domestic customers. Nevertheless, buyers are importing
more to cover the deficit. Inventories of imported steel at the
docks, as end September, rose by 21 percent, compared with the
previous month. In South Korea, demand from the major consumers is
predicted to be firm but smaller operations are giving cause for
concern. Domestic prices are unchanged. We can see no significant
improvement in Taiwanese consumption. Sales to end-users are
relatively weak at the moment and stocks are expanding.
EU producers intend to raise
basis values on all products for the first quarter. As a result,
price levels will be close to our World market figures in US dollar
values. This could encourage third country imports but offers from
these suppliers still remain limited in most countries. The Polish
price trend is positive and expected to remain so, as sales continue
to reflect the rapid recovery in the general economy.
consumption is still growing in Slovakia and the Czech Republic,
market activity has slowed noticeably over the last month. Steel
users have become very cautious and are postponing order placement.
They feel they cannot pass on the higher prices to their customers.
Inventories of strip products are getting larger, particularly at
the distributors but mill exports are booming. Suppliers intend to
lift period one flat product prices by €30/60 per tonne.
New housing starts are slowing
down in the US. The non-residential construction market remains in
decline. Steel makers are aiming to keep transaction prices steady
in the seasonally weak fourth quarter. We have noted some slippage
in Canadian domestic transaction values, despite the efforts of the
mills to maintain them. Building activity continues to deteriorate.
The Chinese government's
attempt to cool the economy has negatively impacted on construction
demand, which is traditionally quiet in period four, causing local
prices of long products to edge down. Producers are looking to
export markets to off-load excess material, thus putting pressure on
bar prices elsewhere in South East Asia.
Japanese commercial building
demand is strong with increased redevelopment in urban areas and
more plants needed for IT applications. In contrast, Taiwanese
construction activity is poor. Traders, looking to sell imported
material are finding the market very quiet. Recent forecasts suggest
that South Korean long products' sales will decrease in 2005 due to
the depressed state of the building industry.
Bar prices have come under
negative pressure in the EU, despite scrap charges being on the rise
in October. We have noted several downward movements. However, as
scrap prices remain high, this could prevent steel values from
Growth in the Polish
construction sector continues to lag behind many other steel
consuming segments. The recent upward price trend has halted. The
Czech building industry is entering the usually slower Winter phase
and, therefore, demand is likely to suffer. Now that more steel is
available, we are beginning to see some small price corrections.
Whether these deteriorate into a serious slide will depend to a
large extent on the severity of the Winter weather.
Source: MEPS - International
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