INTERNATIONAL
STEEL PRICES - LATEST MARKET ROUNDUP FROM MEPS
This
article has been extracted from the June 2005 issue of MEPS International
Steel Review
FLAT PRODUCTS
US demand is sluggish. The
traditional July/August slowdown is likely to be even more
exaggerated than usual this year. Mini mills have short lead times,
a reflection of their non-involvement in higher end applications.
Their falling scrap costs, which are translating into lower steel
prices, are negatively affecting the rest of the market. Transaction
values have declined sharply this month. Import offers are almost
non-existent.
Canadian buyers report that mill
transaction values are constantly reducing. Producers are selling
"non prime" material at very low figures. The market is
extremely soft and expected to remain that way through the third
quarter. Service centre business is very quiet, with resale pricing
causing concern.
Chinese market prices have deteriorated for
the second consecutive month. The decline during recent weeks has
been quite substantial. Order placement by end-users is stagnant in
the face of the negative price-trend. Demand has weakened as a
result of government controls. Domestic supply has increased
following the reduction of the export tax rebate.
An inflow of offshore tonnage is starting
to make an impact on the Japanese general market scene. Inventory
levels of strip products, as end April, were up 1.1 percent from
March - the third consecutive monthly increase. However, direct
sales to major end-users, such as auto and shipbuilders, are
expected to maintain a strong pace throughout 2005.
South Korea's economy is slow to recover
from its current depression. Flat product demand is lacklustre but
forecasts suggest small growth during the second half of this year.
As expected, strip values have started to drift downwards in Taiwan
as foreign competition, especially from mainland China, intensifies.
Very few transactions are being concluded. Consumers, who are aware
of high inventories at the distributors are hesitating before
placing orders of any significant size. It is not anticipated that
the market will improve in the short term.
European mill production cutbacks have not,
so far, succeeded in stabilising the downward price spiral.
Producers have been expanding exports to Asia and the Middle East to
help remove surplus material from the domestic market but this
business has now slowed. Customers still need to make significant
stock adjustments before normal buying patterns are resumed, in the
face of stagnant or shrinking real consumption. Further price
reductions are unlikely to encourage any additional purchasing.
A slowdown in Poland's general economy has
clearly impacted on domestic steel demand. In the Czech and Slovak
markets, producers are curtailing output of commodity grade strip
products. Their goal is to liquidate stocks and to restrict supply
to the market place in order to try to slow the relentless negative
trend in prices. Steel service centres have stopped purchasing and
are undertaking an inventory drawdown. End users are only buying
limited quantities at the last moment. Export business is dull.
LONG PRODUCTS
Significant falls in scrap
prices have put US long product transaction values under negative
pressure this month. The Canadian market is soft and bar prices are
starting to slip, under the influence of lower raw material costs.
The anticipated seasonal upturn in demand has not materialised.
During the last four weeks, Chinese
construction steel prices, with the exception of beams, have posted
an overall downward trend. Suppliers have slashed prices due to high
inventories and poor sales. Building activity remains sluggish in
Japan although there are some redevelopment projects ongoing around
Tokyo. Long product prices are fairly firm.
Consumption continues to be adversely
affected by the lack of economic improvement in South Korea. Recent
annual forecasts suggest a 4.8 percent fall this year compared to
2004. Taiwanese domestic prices this month are greatly influenced by
cheap Chinese imports. Local mills have been forced to offer further
substantial discounts. Market players are pessimistic about the
outlook in the near-term.
Western European long product prices
continue to decrease, following the fall in scrap values. The market
is quiet. There is also pressure in some countries from non-EU
imports. Polish inventories are still high to the detriment of mill
prices. The weather in the Czech/Slovak market has improved
enormously but construction activity is not responding as well as
expected. Soaring import volumes of competitively priced steel are
eroding local prices. The downward tendency is also being driven by
falling scrap costs.
