LOW DEMAND KEEPS GLOBAL STEEL PRICES IN CHECK – MEPS
After offering small price reductions in mid-February, US
flat product producers became increasingly aggressive as they tried to secure
orders from customers amidst a weather-related decline in general demand.
Manufacturing, construction and auto have all been affected by the extreme
In Canada, prices have softened and further weakness is anticipated in the
second trimester. Mill order books are acceptable, with Dofasco quoting May
delivery. The depreciating Canadian dollar continues to keep imports to a
Despite early spring being, traditionally, a peak season for manufacturing in
China, that sector is experiencing weaker growth. This has created negative
sentiment in the steel industry. Furthermore, overcapacity is weighing heavily
on the market, both domestically and globally. On a more positive note,
inventories are declining.
Recent Japanese sales have been driven by higher demand for houses, cars and
electrical home appliances, ahead of a sales tax hike in April. Consumption has
also been boosted by public works expenditure.
The South Korean steel industry is in the midst of a prolonged slump, causing
producers’ profits to tumble. In a climate of lacklustre demand, the mills are
grappling with surplus supply due to domestic overcapacity and an influx of
cheap Chinese material.
In Taiwan, major steelmaker, CSC, has said it will lift official domestic prices
by an average of 0.37 percent for the April/May period, following a 1.2 percent
increase in March. Although sales were subdued in February, the company expects
demand to climb in the second quarter, which is, traditionally, the peak season
for industrial output.
Steelmakers would like to impose an April advance in Poland but buyers do not
believe the move is viable, given the present state of demand. In fact, selling
values have weakened again during March. Forecasts for steel consumption later
in the year are cautiously optimistic. Although very few import deals have been
concluded, rumours of cheap offers are influencing domestic pricing in the
West European producers have, so far, failed to close deals for the second
quarter at the target prices they initially announced. Falling input costs have
hindered the mills’ aspirations. Moreover, offers from third country sources are
becoming more competitive, although the lengthy delivery lead times involved are
still considered to be a big risk in today’s market climate.
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