MEPS - GLOBAL STEEL PRICE RISES IN MAY FOR THE FIRST TIME IN TWELVE MONTHS
US strip mill product transaction prices
have firmed, following recent price hike announcements by all the major
producers. The mills appear to be quite disciplined about the implementation of
the increase. Moreover, delivery lead times are slowly extending and the threat
of trade cases against overseas suppliers has made buyers very cautious
regarding booking foreign material. Distributors, who still have plentiful
stocks, continue to reduce inventories.
Canadian mill activity is still poor, with short delivery lead times. However,
import volumes are drying up as domestic prices become more competitive. Market
participants believe that transaction values have now reached the bottom.
Service centre sales are steady, but sluggish for the time of year. The high
priced stocks that all distributors are carrying are weighing heavily on resale
Cheap iron ore continues to undermine market prices in China. Demand from the
property market, auto, shipbuilding and appliances is weakening. The People’s
Bank of China recently made its third interest rate cut in six months in order
to support the economy. Major steelmaker, Baosteel, has left its official
ex-works list prices, for the June delivery of most flat products, unchanged
from the previous month. June is typically a slow season for the Chinese steel
In Japan, inventories of flat rolled products are still in surplus. Several
large steelmakers will cut output, in the April/June period, to try to rectify
the situation. In March, shipments of carbon steel finished products were at
their highest level for two years but the rise was purely due to better export
volumes. Domestic deliveries actually fell. Although overseas business is brisk,
export prices continue to tumble. Import volumes, in March, fell 33 percent to
the lowest point since September 2013, partly due to the weak yen, but also
because of less healthy levels of consumption.
South Korean steelmakers are concerned about the high volumes of low-cost
Chinese material entering their home market, even though steel imports shrank by
over 8 percent in April from a year earlier. The main reasons for the
contraction were slumping demand and climbing inventories. The economic recovery
remains lethargic. In addition, more recently, Russian offers to the Southeast
Asian market have disrupted South Korean exports to that region.
Chung Hung Steel, one of Taiwan’s major flat product re-rollers, announced lower
list prices for May contracts, compared to the figures published for April. The
cuts were a similar magnitude to those previously announced by major integrated
producer, CSC, for June. Marketplace transaction figures have mirrored the move.
Sales remain weak amidst stiff competition from cheap imports.
In Poland, strip mill product prices are stable. Buyers do not believe that
significant increases are possible in the present climate. Consumption is
reasonable but imports continue to take up a large share of the market.
Czech/Slovak transaction values have softened slightly, despite improvements in
the economies of both countries. Market sentiment has certainly revived amongst
many Czech manufacturing companies due to the weakness of the currency, cheap
energy and recovering domestic demand. There is less competition from Ukrainian
steel mills as their output has been curtailed by the political crisis in that
Flat product numbers are generally unchanged in Western Europe, although we can
detect a little negative pressure in certain countries. Activity is picking up,
albeit slowly, as the economic climate improves. Some steelmakers have decent
order books. However, their raw material costs remain low, providing them with
limited backing to lift selling prices. Many third country producers continue to
reduce flat product price quotations. Buyers are beginning to show more
interest, although, much of this material would be arriving in the holiday
Steel Review - May Issue
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