GLOBAL STEEL PRICES SET FOR DOUBLE DIGIT PERCENTAGE HIKES THIS YEAR

US mills appear to be busy with delivery lead times stretching out to early April. Customers need to replenish stocks and there is a lack of imported steel at present, although this could change later in the year. Inventories at the service centres have declined but business is not so robust. However, profit margins are said to be holding. Mill transaction prices have soared since our January report, driven by volatile input costs and higher energy and transport charges. The major steelmakers have all announced further, substantial hikes for second quarter supplies.

Canadian mills have solid forward order books. Transaction prices continue to advance at a rapid rate as delivery lead times move out to April. Producers have tabled further increases of $C30/50 per tonne for period two. Imports are effectively non-existent. This, together with recent mill consolidations and production outages, has caused supply tightness. However, service centre business is slow, creating a great deal of competition at the distribution level, where resale values are under threat. With the rising steel prices and strong Canadian dollar, manufacturing companies are feeling extreme pressure.

Supply was badly restricted in China in late January and early February by inclement weather. Since the return from the New Year holidays, domestic prices have undergone further positive developments in a climate of good demand and low stock levels. In Japan, flat product demand is strong from auto and electrical appliance makers but the distribution sector is weak. Nevertheless, inventories are gradually reducing. Quayside stocks of imported flat products, at the end of January, declined for the fourth consecutive month as overseas suppliers diverted goods to their domestic markets or more lucrative export ones. Buying activity has picked up because of expectations of significant price hikes planned for the second trimester. Market prices are already moving up as a result.

After weeks of speculation, Posco finally announced it would ramp up South Korean prices for hot and cold rolled coil and also heavy plate destined for non-shipbuilding applications, effective February 1. The company said it may have to go for further increases after April 1 when the higher costs of iron ore and coking coal will kick in. Values continue to rise in Taiwan, where sales are robust. Domestic mills are expected to boost values inline with the international situation for second quarter business.

Excellent growth rates in industrial output continue to provide good levels of demand for Polish steelmakers. Although strip mill prices are stable this month, Mittal Steel Poland has announced increases for March. The Czech/Slovak market is firm with some shortages reported. Imports are scarce and customers are ready to accept planned price hikes in the second trimester. West European mills are also benefiting from a lack of competitive third country imports. Low inventories at distributors need to be replenished. Buyers are accepting that prices must go up as producers try to recover higher input costs.

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

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