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Home > MEPS Steel News - 30.03.2015


Flat product prices have continued to plummet in the US. While underlying consumption is generally good, overblown inventories and perceptions of lower prices in the future are masking true demand. Imports from all over the world have rapidly gained market share, encouraged by the strong US dollar and slow economies in Europe and Asia. Domestic capacity utilisation rates have dropped sharply, to below 70 percent. As orders on local mills have slowed, producers have continued to offer discounts to try to generate new business.

In Canada, domestic mill output has slowed as orders dry up. Local producers are striving to match import prices, so transaction values continue to spiral downwards. Customers are not replenishing their inventories until they are sure the bottom of the price cycle has been reached. The hope is that market conditions will improve once spring arrives.

Chinese market sentiment remained weak following the lunar new year holidays. The anticipated demand improvement failed to materialise and prices have continued their negative trend. Further pressure has been put on selling values by the ever-declining cost of iron ore. Overcapacity remains a serious problem, producing a supply glut in an economy that is not growing at the speed seen in the past.

Slowing activity and rising steel stocks have hit prices in Japan. Consumption fell by another 10 percent in January, compared with the previous month – the fifth consecutive monthly drop. Export volumes are also declining – down by 5.5 percent in February, year-on-year.

After surging dramatically during 2014, imports into South Korea have started to decline. They fell by 7 percent in February, compared with the previous year, as volumes from China dropped significantly. There is still 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 a climate of weak demand from domestic downstream customers, declining export orders and stiff competition from cheap imports, Taiwanese steelmaker, CSC, has decided to cut domestic list prices for April/May shipments by an average of 5.2 percent, compared with the figures published for March. The reduction is the steepest over the last six months. In the domestic marketplace, transaction values have continued to fall.

As anticipated by buyers, this month’s Polish domestic transaction values for flat products are unchanged. Suppliers are talking of increases for the second quarter. Consumption is reasonable but imports continue to take up a large market share. We have noted some small upward movements in the Czech/Slovak region as the economy slowly recovers. The Czech central bank will continue with its currency intervention policy until at least the second half of next year, in a bid to promote exports.

In Western Europe, slow purchasing activity over the last month has not supported the domestic mills’ desire to lift basis values for flat products. However, local steelmakers have reasonably good order books, thanks to improved export business on the back of a weak euro. Moreover, Ilva has been out of the market. Furthermore, a number of mills have been carrying out planned maintenance and/or have had production problems. All these factors led to a tightening of supply.

Source: MEPS International Steel Review - March Issue

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