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Home > MEPS Steel News - 04.07.2012

STEEL PRICES COLLAPSE AROUND THE WORLD

MEPS reports that steel prices declined in June in 25 of the 28 countries researched. However, all values decreased in US dollar terms.

Falling raw material costs, together with a flood of imports resulting from weak economic conditions in other regions of the world, have created further downward pressure on flat product prices in the US. Overall, the domestic economy is performing satisfactorily but steel demand has declined. Currently, although end-user activity has not changed, service centres are unloading their high priced inventories to make room for lower cost steel in the future. Consequently, resale values are becoming very competitive.

Canadian transaction values have also moved down, reflecting the recent decline in scrap prices. Falling input costs and lacklustre demand are likely to persuade the mini-mills to offer further discounts over the summer. Customers remain nervous about forward pricing.

The fact that several leading Chinese producers have elected to slash their official July ex-mill figures has exerted further negative influence in an already weak domestic market. New sales quantities to export clients are subdued and those prices have also fallen. Market participants do not anticipate a price recovery until July or August at the earliest.

Japanese export volumes grew significantly in May due to the weaker yen in March, when a great deal of the business was concluded. Since then, the currency has started to strengthen again, adversely affecting the domestic millsí competitiveness in overseas markets.

The South Korean market is winding down ahead of the summer holiday season. End-users are reluctant to place orders at this time. Consequently, overall inventories of flat products at the service centres continue to climb. Domestic demand from construction and shipbuilding is weak, although auto output is relatively brisk.

West European buyers are reluctant to place orders in what they perceive to be a declining market. Although the mills are attempting to hold on to selling values, it is a struggle to do so. They may decide to lower their capacity utilisation rates even further in order to try to balance supply with demand. As the euro loses ground against the US dollar, third country import offers are scarce.

Source: MEPS - International Steel Review

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