DOWNTREND IN MEPS GLOBAL STEEL PRICE PERSISTS
US flat product transaction values have
shown a steep decline over the last month, in the wake of high volumes of
cheaper imports and overblown service centre inventories. Domestic mills,
experiencing a notable lack of orders, have started to compete on price with
overseas suppliers. Dropping mill input costs are softening the blow for some
steelmakers. Distributors are purchasing very cautiously as they watch
transaction figures plummet. Their resale values are also tumbling as they
offload excess stock.
Although auto activity is still strong in Canada, distributors are scaling back
their order placement as they wait for steel prices to bottom out. Moreover, oil
and gas related sales are declining. This, together with the falling outlay on
input costs, has forced steelmakers to make substantial transaction price cuts.
The Chinese economy is showing signs of moderating growth. Steel orders have
been cut due to slowing manufacturing activity. This has badly impacted steel
prices, which have posted significant losses since MEPS December report. There
have been a variety of views on the implications of the government’s decision to
withdraw the VAT rebate on exports of some boron-added items. However, it seems
likely that steelmakers are already looking to exploit other loopholes.
There is concern in South Korea about the growing volume of foreign steel
arriving in the country. This material, as well as steel from domestic sources,
continues to flood the market, weighing heavily on selling values, which have
undergone further negative developments this month. Falling raw material prices
are also driving figures down as customers call for discounts.
Taiwan’s integrated producer, CSC, reported declining sales revenue in November,
compared with the previous month, but shipment volumes were slightly up in
December. Downstream businesses, anxious about their ability to compete in
global markets, have been ordering less. In the marketplace, flat product
transaction values are falling.
In Poland, strip mill product prices have decreased when measured in euros.
Buyers report that the lower figures are valid until the end of March, although
producers are trying to talk them up. Business is quiet in the Czech/Slovak
region, following the holiday. Steel demand is still at a low level but is
better than a year ago. The mills have yet to make any official price
announcements for 2015. Buyers do not believe they will ask for any rises, even
in the second quarter. Service centres are purchasing cautiously because of
Steel Review - January Issue
Free Sample copies
of MEPS Reports
the latest copy of International Steel Review here
up for free MEPS steel news alerts