FLAT PRODUCTS

The shortfalls that are still occurring in the US are likely to continue for some time. Planned blast furnace relines, various production difficulties and a lack of metallurgical coke will contribute to the existing tightness in the market. Lower surcharges for May deliveries have been more than offset by higher basis prices. Several producers are now rolling the surcharge into the basis figure. Very little speculative purchasing is taking place because of the sky high prices. A number of service centres are very low on stock and, therefore, are continuing to recoup the mill increases from end-users without any problems. It remains difficult to judge the level of real consumption but the consensus view is one of slight improvement. Despite sluggish underlying demand, Canadian customers remain anxious to acquire tonnage. There is a lack of output caused by raw material shortages. Producers have reduced surcharges but, at the same time, basis values have soared.

The Chinese government's efforts to dampen growth in steel demand have, so far, had little effect. Further measures have recently been brought into force. If successful, both local and overseas producers could face cooling demand just as Chinese steelmakers ramp up production. Currently, the steel scene is relatively quiet as the May holidays approach. Japan's steel market is recovering well. Domestic inventories of strip products, as end February 2004, decreased 2.5 percent compared to the previous month. The level of stocks is now considered appropriate for current consumption. Overall sales are forecast to continue growing during the April/June period.

As widely anticipated, Posco has announced price rises of KRw70,000/80,000 per tonne for all major steel products, effective with orders placed April 19. The company said the move had been made in an effort to narrow the gap between domestic and international prices. Local demand is expanding. In Taiwan, CSC successfully implemented the round of increases announced for period two. The steelmaker has now told Japanese customers of its intention to lift values for shipments in May/July by ¥6000/10,000 per tonne, depending on product. Export quantities have been reduced as the needs of domestic users are given priority.

Raw material shortages are leading to delays and shortfalls in deliveries from a number of EU mills. Second quarter order books have been full for some time now. The major producers have announced considerable price rises for period three - up to 20 percent. It is still difficult to source competitively priced material from outside Europe because freight rates are moving up.

Growth in industrial output gathers pace in Poland. Projections for the remainder of 2004 are encouraging. Local steelmakers hope to benefit from this improvement. The Czech/Slovak market has turned around remarkably quickly. Prices were slow to recover in the early part of the year but are now catching up quickly, although they still have some way to go to reach the level of surrounding EU countries. The mills are virtually sold out. Several producers are reported to be cancelling some contracts, only providing partial tonnage or renegotiating prices on others. Shortages are starting to cause concern. Import quantities are declining.

LONG PRODUCTS

US transaction prices continue to move up, despite lower scrap costs. However, in the Canadian market, we have noted some marginal negative movements.

The rainy season has led to a general slowdown in Chinese construction activity. Prices have begun to slide in recent weeks, partly as a result of dwindling scrap charges. Once demand and supply are more in balance, values should stabilise. A slight weakening in Japanese scrap prices has not prevented the producers from securing increases on all products following negotiations carried out during the last month. Demand from the commercial and housing construction sectors is forecast to expand in the April/June period.

South Korean consumption is steady at a satisfactory level. Local mills continue to focus on supplying domestic requirements. Taiwanese demand for construction steel has improved. With raw materials in short supply, many local steel producers have reduced output. Prices have moved sharply upwards.

Those EU mills suffering from a lack of scrap, continue to make sure they reflect their high raw material costs in finished product pricing. The seasonal surge in demand is likely to lead to more price rises in the coming months. Building activity is picking up in Poland now that Spring has arrived. Steel values continue to show positive movements. Czech building output has been growing continuously for the last nine months. There is a dearth of material.

Source: MEPS - International Steel Review           Click here for MEPS World Steel Prices