STEEL PRICES - LATEST MARKET ROUNDUP FROM MEPS
article has been extracted from the May 2006 issue of MEPS International
US buyers have accepted
further transaction price increases. The driving force is a lack of
supply. All domestic mills are operating an allocation policy for
customers, with no extra tonnage to be had. Several are working
below normal rates due to a variety of production/labour issues.
Availability is even tighter because very few imports are being
Canadian market conditions are very strong.
Transaction values have moved up and the trend is likely to
continue. Supply is constrained, with Stelco telling some buyers
they will have no material until August. This is partly due to
trying to build up stocks to protect major contract customers ahead
of an anticipated strike on July 31. Inventories are low at most
service centres and distributors' profit margins have improved.
Importers have stepped up their offers for August/September arrivals
by $C100 per tonne.
Purchasing activity in China is slow
following the Labour Day holidays and inventory adjustment is
protracted. Market sentiment seems less positive than a month ago,
despite falling stocks of foreign steel at the ports. In Japan,
domestic inventories of strip products continue to subside. Stocks
at the end of March were down by 4.8 percent, compared to the
previous month but the level still remains above the 4 million tonne
which is considered appropriate. The slowdown in export sales has
been further exacerbated by recent strengthening of the Yen against
the US dollar. Import volumes are still climbing.
Similarly, the strong KRW continues to pose
problems for the South Korean mills, making the market more
attractive to exporters in the region. Overseas sales are difficult
for the same reason. However, the overburdened stock situation
is slowly being brought under control and prices should benefit in
the longer term. In Taiwan, the steel market in May continues to
prosper with an ever upward price tendency. However, the threat from
cheaper Chinese imports remains. Moreover, the Monsoon season, which
often adversely affects demand, is rapidly approaching.
Continuing price rises and difficulties in
sourcing material remain the outstanding characteristics of the EU
market. All the mills have announced significant price rises for the
third quarter, which no doubt will be secured. However, third
country import offers are beginning to look attractive when compared
to the proposed European period three figures. Market players are
concerned that these could prove disruptive in the latter part of
the year or in early 2007.
Polish domestic producers have achieved
further price advances in the strip mill category and figures look
poised to go up further when third quarter proposals are announced.
However, although ex-mill numbers are increasing, resale values are
not following the trend to the same extent. Distributors'
inventories are now fairly high but real consumption is quite flat.
We can report very little change in Czech/Slovak pricing this month.
Producers are careful not to push values up too much so as to avoid
attracting Polish imports in the North or German ones in the West.
Customers are still hesitating about rebuilding stocks. There are no
reported shortages from the mills.
US transaction values were
quite flat in May. Nevertheless, ongoing recovery in commercial and
industrial building activity is providing firm demand for a number
of long products. Delivery lead times have moved out in Canada and
mill transaction prices are stable or rising. However, service
centre sales are still slow and profit margins have not improved.
Since the Labour Day holidays, Chinese
construction steel prices have rebounded or remained steady,
depending on product. A seasonal upturn in consumption by the
building sector is helping to sustain the price recovery. Although
Japanese demand has shown a modest improvement, the construction
industry remains depressed as a result of the recent building sector
South Korean activity is showing signs of a
recovery in the peak Spring construction season. Offer prices of
long products have been raised in Taiwan because of the surge in
international scrap costs. However, it is difficult for downstream
customers to cope with these rapid increases, causing a temporary
reduction in transaction volumes. How long the market can continue
to flourish remains uncertain.
The price trend in Western Europe is
positive, although the top may have been reached for some products,
unless scrap begins to move again. The situation is similar in
Eastern Europe where the construction season is just beginning after
the long Winter months. Producers appear to be absorbing a
proportion of their escalating input costs for the time being.
up for free MEPS steel news e-mail updates