STEEL PRICES - LATEST MARKET ROUNDUP FROM MEPS
article has been extracted from the April 2006 issue of MEPS International
There is a fair amount of
concern in the US amongst service centres, OEM's and end-users that
supply is becoming very tight. The situation appears to be driven by
supply-side controls rather than any significant uptick in real
demand. Nevertheless, distributors are busy and buyers have accepted
a transaction price increase of $US20 per tonne. Producers are
talking of further hikes for June. So far, rising import volumes
have failed to adversely impact the market.
As expected, transaction values are moving
up in Canada, where market conditions are good. Further increases
are anticipated. Supply is extremely limited because of mill
production issues and this scenario is likely to continue into
period three. Resale margins are holding steady.
Purchasing activity in China has slowed in
recent weeks, and inventory adjustment is protracted. However,
market sentiment remains positive. Stocks of foreign steel at the
ports have fallen significantly. The strip market is getting better
in Japan due to an upturn in China and export price increases by the
South Korean mills. In addition, inventories have finally started to
subside. Stocks at the end of February were down by 1.9 percent,
compared to the previous month. Meanwhile, export volumes continue
on a steady downward trend.
South Korea's overburdened stock situation
is coming under control. According to recent data, flat product
inventories held by domestic producers at end March fell by 14
percent compared with the previous month. However, the strength of
the WON continues to pose problems for local mills, making the
market more attractive to exporters in the region and South Korean
steel more expensive for overseas buyers.
The uptrend in Taiwan has continued into
April. Sales volumes generally have improved. CSC's proposed second
quarter price hikes have been successfully executed. However, there
is a degree of concern that distributors are accumulating excessive
stocks, as they try to purchase ahead of perceived price rises. The
effect on steel demand of the approaching Monsoon season should also
be taken into consideration.
The West European mills have secured their
proposed rises for period two and most suppliers now claim to be
fully booked for the quarter. The intention is to lift values again
for third trimester deliveries amidst tight supply from home and
abroad. However, in a market characterised by shortages and
lengthening lead times, we can detect no substantial upturn in real
consumption. Polish market demand is steady. The domestic producers
have achieved further price advances in the strip mill category. In
the Czech/Slovak market, the upward price movements have been very
modest, so far, although consumption is strong and inventories on
the low side. Import competition is not disruptive.
Ongoing recovery in US
commercial and industrial building activity has resulted in firm
demand for a number of long products. Transaction values are moving
up. Canadian prices are firm or rising but service centre business
is still described as "spotty" for some product lines.
Mill delivery lead times are extending. Inventories are coming down
Chinese prices of construction steel
products have changed very little over the last month. However, we
expect to see some price expansion as domestic stocks steadily
decline, raw material costs increase and demand improves along with
the weather. Japanese figures are steady, despite ongoing poor
demand. The South Korean building segment is reported to be showing
some signs of recovery as we move into the peak Spring construction
season. The upward price tendency in the Taiwanese long products
sector continues. However, the upcoming Monsoon season could have a
detrimental impact on the market in the near future.
Scrap prices are pushing up steel values in
Western Europe. With the traditionally busy months of the Summer
still ahead, figures look set to remain firm or even trend upwards.
Weather related slowdowns in the construction markets of Eastern
Europe are now coming to an end and steel prices are benefiting.
Polish mills are enjoying good export business, even thought the
local currency is strong. There are many new projects in the
pipeline in the Czech/Slovak markets.
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