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
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
Source: MEPS - International
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