WEAK ASIAN DEMAND DRIVES THE MEPS GLOBAL STEEL PRICE LOWER IN JUNE
Chinese steel prices were lower in mid-June than those
reported by MEPS four weeks earlier. Overcapacity is the main culprit for this
disappointing scenario. Demand, although improving gradually, is not keeping
pace with production and any meaningful restructuring of the steel industry
seems some way off. Distributors and traders are becoming increasingly reluctant
to hold large stocks in the face of falling prices. Following the Dragon Boat
Festival – June 10 to June 12 – selling figures tumbled. In response to market
conditions, most leading steelmakers have axed their official ex-works prices
Domestic sales are steadily improving in Japan. Imports are falling but there is
still strong competition from China and South Korea. The export market remains
difficult because of a lack of demand from key customers in the Asian region and
overcapacity in that part of the world. Domestic steelmakers continue to try to
ramp up prices but there is customer resistance.
In South Korea, the domestic mills have been able to apply a price improvement
for hot rolled coil but not for any other flat products. Overseas business is
poor, with Chinese demand now quite weak. Moreover, the depreciation of the
Japanese yen is hurting Korean exporters. The steel industry is forecast to
remain lacklustre in the second half of 2013, despite a slight recovery in
economic growth at the start of the year.
Taiwanese prices have come under renewed pressure from cheap Chinese offers as
the latter country continues to produce steel surplus to its own requirements.
Raw material costs are also falling. Domestic demand is sluggish. The country’s
largest steelmaker, CSC, will cut official list prices for the July/August
period by an average of 4.7 percent, compared with June.
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