This
article has been extracted from the December issue of MEPS International
Steel Review
FLAT PRODUCTS
US market activity is flat.
The mills, faced with weak fourth quarter order books, started
seasonal maintenance shutdowns in November and these continue this
month. Customers' inventories are high. Mill transaction prices
continue to slip. We have unconfirmed reports that surcharges are
not being universally applied, especially to large volume
purchasers. Steel market conditions are expected to improve in the
first quarter and AK Steel Corp. has already announced a $US50 per
ton hike. Canadian market activity continues to be subdued. However,
inventory levels appear to be more tailored to present day demand
than those in the US. Nevertheless, we have monitored further drops
in transaction values over the last four weeks.
Chinese stock levels are low and
consumption is satisfactory. Following Baosteel's lead, several
other major domestic steelmakers have now lifted their official
price for the first quarter of 2005 by between 7 and 8 percent.
Export business continues to flourish at the same time as import
volumes recede. Impacted by earthquakes, tropical storms and ongoing
maintenance of steel plants, Japanese producers have slashed export
volumes over the past few months. The South Korean economy is slow.
Although overseas sales of manufactured goods are high, domestic
business has contracted. Despite this, local steel consumption of
flat products is forecast to keep firm throughout 2005. Further
price increases for period one appear unavoidable.
On November 25, CSC announced a number of
price hikes for first trimester shipments to domestic customers
ranging from $NT800 to $NT1300 per tonne. The downstream re-rollers
and coating mills are now trying to lift their prices ahead of this
increase in their costs. However, more and more cargoes with cheaper
new offers, originating from neighbouring countries such as China,
India and South Korea, are affecting consumers' confidence. The
weaker US Dollar against the local currency is not helping the
situation.
Business is pretty slow throughout Western
Europe. The stockbuild caused by speculative purchasing has been
exacerbated by weaker consumption during the fourth quarter. Several
of the major EU mills have now confirmed new higher target prices
for period one. The current strength of the Euro against the US
dollar will make the European market more attractive to imports in
the future but high freight rates and tightness in the availability
of vessels could provide some protection for EU producers.
Inventories of strip products are starting
to build in Poland and order intake has slowed. The Czech/Slovak
market is very quiet. Shortages experienced earlier in the year have
totally abated. Material is now available from Russia and Ukraine -
a signal that supply has eased substantially. Producers are still
speaking of higher prices in the first quarter but, for the moment,
buyers are not ready to commit to forward orders.
LONG PRODUCTS
US long product supply has increased lately
as high prices have attracted imports. However, as demand is holding
up, pricing has been relatively firm. Canadian building activity is
fairly dull. Nevertheless, the mills have fought hard to maintain
transaction values.
The construction steel market in China
continues to show an overall downward price trend as demand fails to
recover. Government measures have impacted on the residential
building sector. Infrastructure projects continue to flourish. The
immediate outlook for sales is poor because of the onset of cold
weather in many parts of the country.
Japanese commercial building activity is
strong but residential construction has failed to pick up. In
addition, there are fewer civil engineering projects ongoing at
present. Depression in the South Korean construction industry has
led to a flat market for long products. Due to a slowdown in
building in Taiwan, together with a weakening in regional scrap
values, most construction steel products have registered price
declines since last month.
EU domestic demand and prices are falling
because of seasonal factors. Export markets offer limited
opportunities. Several mills are still contemplating their length of
closure over the holiday period. The recent positive price tendency
in Poland has reversed. Growth in the construction sector lagged
behind other steel consuming segments throughout the year and,
throughout the Winter period, no improvement is likely until next
Spring. There is also seasonal negative pressure on Czech/Slovak
values.
