INTERNATIONAL STEEL PRICES SURGE

A proportion of the recent transaction price rises announced by the US producers are slowly working their way into the market place, in many instances driven by escalating scrap surcharges. Mill order books for April have filled up quickly and several suppliers are now quoting mid May. Import offers are few at present, due to the weak dollar and good demand elsewhere. Although inventories at the service centres are coming down they have still not reached the desired level. Resale margins are holding steady for now but some resistance to higher prices has been noted. Distributor business is steady.

Canadian transaction values are above those of February and price pressure in the coming weeks is expected to be positive. Mills want a $C30/50 per tonne rise in May. Service centre inventories are reducing in a climate of better demand. Some distributors report that stocks are down to 2 to 2.5 months supply.

In China, market players are cautiously optimistic following the resumption of business after the New Year holidays. Domestic demand is good and export business continues to flourish. After Baosteel announced its intention to ramp up period two prices by an average of 7 percent, market values have started to respond. An additional boost came from news that India would impose a duty of more than $US6 per tonne on iron exports from the beginning of March.

In Japan, domestic and export demand is strong. This scenario, combined with higher input costs has led to a number of price rises. However, total domestic inventories of strip mill products held by steelmakers and service centres, at end January, were up 3.3 percent compared to December. Quayside stocks gained 1.8 percent in the same time frame.

South Korean sales continue to be dull amidst increased capacity. Inventory depletion in the distribution sector is still not in its final stages. The Taiwanese market appears quite strong after the Lunar New Year. Encouraged by the price hikes proposed by the major mills in mainland China, CSC has followed the trend with announcements of higher prices for the second quarter.

The Polish economic situation is progressing well, creating excellent demand conditions for steel. Producers hope to boost prices in the second trimester. The economy is also very positive in Slovakia and the Czech Republic. Manufacturing industry is booming and the early onset of Spring has been good for business. Prices are expected to continue on an uptrend over the next few months, although no substantial movements are likely. Imports pose no problems.

The majority of period two business has yet to be settled in Western Europe. A number of steelmakers have announced plans to lift April prices by around €20/30 per tonne but many customers believe the amounts to be too ambitious, given the availability of cheaper third country imports. However, the number of offers have declined recently, and, pricewise, they are less interesting than at the end of 2006.

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

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