GLOBAL STEEL PRICE RALLY CONTINUES
The MEPS world all products composite steel price surged
by 9.2 percent, in April, to reach its highest point since September 2015.
In April, global steel values escalated for the fourth month in a row. European
selling figures rose by 13.4 percent, in US dollar terms, compared with those in
our last report.
Chinese mill offers, both at home and overseas, continued to soar, in April.
This enabled South Korean and Taiwanese producers to lift domestic selling
figures. Our MEPS Asian steel price rose by 8.6 percent, month-on-month.
North American steel values also continued their upward trend, as regional
figures increased by 6.7 percent, compared with last month’s prices. Local
producers announced further list increases following several successful price
advances earlier in the year.
It is widely accepted that demand fundamentals largely remain unchanged.
Therefore, supply-side factors are providing the boost to global steel values.
However, US crude steel production continued to rise, this month, as 72 percent
capacity utilisation was registered, in mid-March, from around 60 percent, not
so long ago. China’s crude steel output rose, year-on-year, last month, as
rising domestic prices encouraged mills to ramp up production.
Chinese steelmakers were, reportedly, focusing on selling in their local market,
where values are higher. However, China exported 23 percent more steel, last
month, compared with February, despite ramping up export offers.
Other major exporters have followed China’s lead in hiking up their prices.
Consequently, market participants are returning to domestic sources, who have
pushed up their prices as a result.
Furthermore, it is becoming increasingly evident that trade protection measures,
specifically in the US, are starting to curtail imports and cause supply
North American buyers report that availability of cold rolled coil and
galvanised material is becoming increasingly constrained, especially for
non-contract customers, with one US buyer remarking that “cold rolled coil is
like gold”, currently.
Traders commented that they have limited supply options for downstream products,
as US steelmakers successfully filed trade cases for flat products, giving
‘carte blanche’ to domestic suppliers to raise prices with little resistance.
However, buyers have warned that, if figures continue to rise, they will look to
find new import sources, not covered by trade cases, which could keep a lid on
To a lesser degree, EC trade cases for steel products are starting to bite
across flat products, giving traders the impression that supply is tightening.
Undoubtedly, protectionism restricts the choice for the customer and goes
against the ethos of free trade. A delicate balance exists between safeguarding
the strategic interests of a steel-producing nation against the unfair dumping
of cheap imports, while giving the customer the opportunity to procure their
material at competitive prices.
Steelmakers have been forced to take decisive action, either by selective
capacity cuts or by filing trade cases, as global selling values, slipped to
their lowest level for more than a decade, at the end of last year.
However, without any significant change in market demand fundamentals, MEPS
believes that the current rise in transaction values, since the start of the
2016, is likely to be a short-lived phenomenon. We forecast that prices will
decline later in the year.
Steel Review - April 2016 Issue
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