MEPS GLOBAL STEEL PRICE HAS FALLEN 24 PERCENT IN THE LAST TWELVE MONTHS
After a slight upward adjustment, last
month, steel prices in most parts of the world continued on their, now familiar,
downward path in June.
The reduction in the MEPS Global Steel Price is the result of fallout from the
collapse in the cost of iron ore as the mining companies made huge investments
in new capacity. For this reason the substantial steel selling price reductions
have not been a major disaster for the world’s steel manufacturers. A
significant amount of the erosion in mill revenue has been offset by a
substantial decrease in the cost of steelmaking raw materials.
In the steel sector, decreasing selling prices are no guarantee of a substantial
upturn in demand – particularly in an oversupplied market. When steel prices
start to slide, the buyers will often postpone ordering material in the hope
that lower prices will develop in the future. Inventory building is reduced,
which in turn creates no discernible improvement in market size in the short
In the United States, GDP growth has, once again been revised upwards. It now
stands at minus 0.2 percent, for the first quarter of 2015. The Purchasing
Manager’s Index (PMI for manufacturing) increased last month to 52.8 – a
positive sign. The majority of buyers continue to purchase only for their
immediate requirements. The prospects of a substantial steel price revival are
poor. The threat of cheap overseas imports is ever present.
The Canadian steel market is still moving at a slow pace. Delivery lead times
from the mills are shortening. The economy is weak. Substantial quantities of
imports have already arrived at the ports. Steel inventories at the OEM’s are in
decline. Service centre stocks are starting to return to normal levels.
Chinese finished steel output increased in May by approximately 2 percentage
points, month-on-month. The domestic market is unable to utilise such an
increase in tonnage. Exports have expanded by over 30 percent, year-on-year, in
the first five months of 2015 but they are insufficient to take up the excess
domestic supply. Some steel mills are reportedly making a loss of 300 yuan on
each tonne of steel produced.
In Japan, the local currency has weakened recently. This should enable exporters
of manufactured goods to be more competitive in global markets. Raw material
input costs are, however, rising. Signs of a slight improvement in economic
activity are on the horizon.
The South Korean Trade Commission recently responded to complaints about foreign
imports of structural sections into the country by imposing anti-dumping duties
on material from a range of suppliers. Seven mills were exempt when they agreed
to lift selling values. Steel imports are on a decreasing path. In April, a
year-on-year, reduction was reported, whilst, in May, the decrease was 11
The Taiwanese steel market has been influenced by price movements in China.
Reinforcing bar list prices have been reduced. We detected very few positive
vibes from the market this month.
The Czech and Slovak economic growth figures remain encouraging, with GNP
figures in the first quarter at 2.9 and 3.9 percent, respectively. The Ukrainian
crisis is weighing heavily on the fortunes of both countries. In Poland, the
flat products sector has been quite steady this month.
Steel demand in Western Europe is holding up reasonably well. The mills are
experiencing strong competition from imports. The European Commission has
instigated an anti-dumping investigation against imports of cold rolled coil
from China and Russia. Selling figures are under negative pressure in most
Steel Review - June Issue
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