MEPS GLOBAL FLAT PRODUCTS STEEL PRICE DROPPED 2.5 PERCENT IN NOVEMBER

As US strip mill product prices continued to fall rapidly in late October/early November, a number of mills began to announce increases ranging from $US30 to $US50 per ton, which were to be effective immediately. Certainly, the proposals have stemmed the previous negative movements. However, customers have questioned how much of the rise will stick, since underlying demand remains muted. Indeed, service centres are complaining of lower margins and fewer sales as the year-end approaches. Moreover, mill utilisation rates and input costs are increasing. Buyers are still cautious regarding their forward purchasing levels.

Canadian transaction numbers have weakened again over the last four weeks. Producers have now announced an increase of $C30/40 per ton, effective with all new orders, claiming that today’s values are unsustainable relative to their costs of production. Demand is mediocre and the distribution sector is carrying excess inventory. Steelmakers hope that the prospect of prices bottoming out will encourage buyers to place much needed orders.

Chinese steel output has started to contract in a climate of slowing demand at home and abroad, together with falling prices. Market conditions are unlikely to improve next month. Baosteel, along with other local mills, has elected to cut its official ex-works figures for December bookings in line with market expectations.

In Japan, a small upturn in domestic demand is compensating for a fall in export business. However, imports continue to rise due to the strong yen. Market prices are still edging downwards, reflecting lower raw material costs and poor market sentiment.

Overall steel demand is soft in South Korea. The major consuming sectors of auto, domestic appliances and ship building are expected to contract during the remainder of this year. Inventory adjustment is slow. Stocks of flat products reached record highs at the end of September.

In Taiwan, CSC has left its domestic prices unchanged for the October/November period. The company stated that the typical peak season demand usually experienced in the final quarter has failed to materialise, partly due to the poor global economic outlook.

Global economic uncertainty has caused steel consumption to slow in Western Europe. Moreover, buyers are reluctant to place forward orders on the mills. Market players feel that worldwide production cuts will hold the key to price stabilisation. Although the steelmakers are curbing capacity, the results are unlikely to be felt until the start of 2012 at the earliest.
 

Source: MEPS - International Steel Review
Also See: MEPS - Flat & Long Carbon Steel Price

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