UPTURN IN MEPS GLOBAL STEEL PRICES AS MAJOR EXPORTERS RAISE OFFERS

At the end of January, Nucor in the US announced plans to put up strip mill transaction prices by $US20 per ton, effective with March shipments, due to "escalating costs and strengthening market conditions". Although we have noted some price improvement for hot rolled coil, customers are resisting paying more for cold rolled and coated steel. In general, although inventories at service centres are still high, they are getting closer to the desired level. Import offers are minimal.

Canadian stockists are working off inventories built up in the first half of last year. Domestic mills are increasing output to meet the improved demand, with delivery lead times standing at eight to ten weeks. As forecast, transaction values are higher than in early January and price pressure in the coming weeks is expected to be positive. Imports are unlikely to be a factor because price offers are quite high.

In the Chinese market, we have witnessed small price gains over the last month. The approach of the Lunar New Year holidays caused steel demand to decline from the start of February onwards. The downturn is likely to be only temporary as the underlying momentum of industrial production is still good and export business continues apace.

The Japanese market is becoming tighter as distributors' stocks of strip products fall. However, total domestic inventories held by steelmakers and service centres, at end December, were up, compared to November, by 2.1 percent - the increase being on the producers' side. The downward trend in import volumes of flat products has reversed. Quayside stocks gained around 11 percent in the same time frame as traders had difficulty finding buyers for material booked earlier last year, much of which was of Chinese origin.

In South Korea, the massive stock overhang in the distribution sector continues to take time to clear. Sales are dull amidst increased capacity. The Taiwanese market is becoming much stronger as demand picks up. Following the surge in Chinese prices last month, values are braced to move up. CSC will keep export prices unchanged for the period February/April.

Polish sales are picking up and producers have already announced their intentions to boost prices in period two by €25/30 per tonne. Market participants think that €20 per tonne is a more likely outcome. The Czech/Slovak markets report extraordinarily high sales for January/February compared with other years. Stock levels are normal to low. The economy continues to perform well and producers and customers are optimistic for the future. Imports pose no problems.

Underlying demand for strip products remains healthy in most Western European countries. Several EU producers are already talking of higher prices in the second quarter, although some major players have still to make formal announcements. Certainly, import prices for third country flat products are now above those quoted at the beginning of the year.

Source: MEPS - International Steel Review - click here for a free sample copy.

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