MEPS GLOBAL STEEL PRICE DOWN TO FIVE YEAR LOW IN DECEMBER
The current price premium for flat
products in the United States, over figures in other parts of the world,
continues to attract imports, placing downward pressure on domestic transaction
values. Producers are still keen to lift selling figures but their proposal for
a US$20 per short ton hike has, so far, not come to fruition as customers see
the mills’ raw material costs slide. The consumption outlook is healthy but, at
the moment, service centres are experiencing a seasonal slowdown in sales
activity. Supply is more than adequate. Inventories are moderate to high and
domestic mill delivery lead times for standard products are short.
Offshore material is still entering Canada but the price differential with
domestically produced material is no longer as significant because overseas
suppliers are worried about incurring ‘dumping’ penalties. Service centres are
keeping inventories steady and only buying for orders already on their books.
Demand on distributors is described as inconsistent, except for auto and energy
applications. Resale values are under threat.
Ongoing weakness on the raw materials side continues to create negative price
pressure in China’s steel market. There is softening domestic demand in the face
of slow manufacturing growth. At the same time, output has been climbing. In
reaction to a stubborn glut of material in the local market, producers are
looking increasingly to overseas sales. Export volumes hit a new high in
November. However, prices declined, giving rise to complaints from a number of
Recent statistics showed that a fall in business spending had plunged the
Japanese economy into deeper recession in the three months to September.
Apparent steel consumption fell in October by almost 7 percent, year-on-year. In
the same time frame, imports increased. They have been climbing now for twelve
months in a row, with the main competition coming from China and South Korea.
However, local producers are selling more overseas, although most export prices
have fallen over the last two months. On the home market, selling values have
Steel from both domestic and overseas sources continues to flood the South
Korean market, weighing heavily on selling values. Lower iron ore prices are
also driving figures down. Although total imports fell in November,
month-on-month, they are still a major cause for concern. Currently, Chinese
material accounts for over half of foreign arrivals.
Demand in the Taiwanese home market has weakened. Major integrated producer,
CSC, reported a drop in November shipments of almost 9 percent. Downstream mills
and finished goods manufacturers are facing growing competition in export
markets as the Japanese yen and South Korean won devaluate rapidly against the
US dollar. Local steel prices are under pressure, not only from cheaper overseas
offers but also from declining input costs.
Polish service centres report that activity has slowed ahead of the holidays.
Effective numbers are unchanged, for now, in euros but are slightly down in
zloty terms due to the recent strengthening of the local currency. The general
economic situation has improved in the Czech Republic, albeit in a hesitant
fashion. In Slovakia, growth has now surpassed pre-crisis levels. In both
countries, steel prices have weakened a little. However, pressure from Russia
has retreated, mainly because the order quantities required by producers in that
country are generally too large for East European customers to finance. Sales
are stable at a low level.
West European demand remains lacklustre as many clients try to minimise their
inventories before the close of the financial year. Although the mills tried to
resist calls for lower prices, in the majority of cases, they failed. Values
have continued to fall, following the trend in raw materials. Offers from Asia
are not particularly competitive at present but supply from domestic sources is
Steel Review - December Issue
Free Sample copies
of MEPS Reports
the latest copy of International Steel Review here
up for free MEPS steel news alerts