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
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
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