MEPS GLOBAL STEEL PRICE DOWN 17.7 PERCENT IN PAST TWELVE MONTHS
Large volumes of imports, together with
collapsing oil prices, have led to cuts in domestic steel production in the US.
However, these have not been sufficient to stem the continual, month-on-month,
decline in flat product transaction values. Buyers are reluctant to make large
purchases as figures trend downwards. Moreover, the volumes of unsold foreign
material at the docks are climbing. Some of this steel is now priced above
current domestic levels as local steelmakers have responded to the import
threat. Activity at the local steel plants in Canada is also slow due to high
volumes of imported flat products. This, together with a dropping outlay on raw
materials, has forced producers to make further substantial transaction price
Overcapacity problems, dramatically declining iron ore prices and disappointing
economic indicators have driven steel selling values to record lows in China.
Negative sentiment is growing. Recently, the Central Bank cut the bank reserve
ratio in an effort to shore up flagging economic growth. Market players are
waiting to see the impact on the steel sector. The Lunar New Year Festival
(February 19-24) was later than it has been in the last few years. This led to
buyers postponing steel order placement for a longer pre-holiday period than
usual. Dealers were under pressure to sell ahead of the vacation. In overseas
markets, export volumes reached a new high in January.
Japanese sources expect annual consumption in that country, in fiscal 2015, to
be at a similar level to that recorded in the previous year. Competition from
overseas continues to pose problems but the depreciation of the yen against the
US dollar is acting as a slight deterrent. Nevertheless, recent figures show
that annual imports, in 2014, increased for the first time in three years.
Concern amongst local South Korean steelmakers is growing as low-priced Chinese
products continue to flood the market. There is also internal oversupply due to
the number of new production facilities that have been brought on stream in
recent years. All this material continues to weigh heavily on selling values,
which have undergone further negative developments this month.
In Taiwan, flat product transaction values have continued to fall. Integrated
producer, CSC, had anticipated further declines when it cut official domestic
list prices for March by an average of 2.3 percent, compared with the figures
published for the January/February period. Global markets are very competitive
at present and both the steelmakers and manufacturers of finished goods have
concerns about their ability to sell overseas.
Steel consumption in Poland during 2014 returned to pre-crisis levels. However,
imports continue to gain market share. This month, domestic transaction values
for flat products are unchanged in euros but have slipped a little when measured
in zloty terms due to the weakening currency. Buyers say that these figures are
valid until the end of March, although they admit that suppliers are talking of
Czech/Slovak transaction numbers have not recovered since the Christmas
holidays. Although the economy is improving there are no positive signals to
support an immediate rise. However, since the political problems began in
Ukraine there has been less pressure from the suppliers in that country, which
used to be the main import influence on the Czech steel market.
Western European flat product makers claim that they have good order books, as
the devalued euro gives them an advantage when selling in US dollar denominated
export markets. Nevertheless, buyers have remarked that for first quarter
business, which is now virtually closed, steelmakers did not push very hard to
implement their proposed €30-40 per tonne advance. It is believed that the mills
will try to enforce the hike when second trimester orders are discussed.
Steel Review - February Issue
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