The MEPS Global All Products Composite
Steel Price Continues to Slip
Worldwide steel selling figures are projected to remain on a negative trend for
the remainder of 2017. The MEPS global all products composite price declined by
1.7 percent, month-on-month, in June. Weakening demand conditions and falling
mill raw material expenditure are likely to put further downward pressure on
world steel values, in the near term.
The majority of North American flat product steel market participants expect
further price deterioration during the third trimester. They anticipate
seasonally weak purchasing activity, in particular from the automotive sector,
and reduced mill input costs. However, in an attempt to halt the recent slide in
selling figures, regional steel producers announced a hike in list values, this
month – with many buyers labelling this initiative as a ‘defensive move’ to
prevent further price erosion.
Amid an uncertain climate, owing to the Section 232 investigation, foreign
competition is expected to reduce. The mills’ price initiatives should minimise
further losses, in the short term.
North American long product figures continue to be hampered by lacklustre demand
and fierce competition between domestic producers. We expect US buyers to resist
the mills’ attempts to raise construction steel prices. Slightly declining scrap
costs will support their efforts to secure further price concessions, until the
end of the year.
In Europe, flat product numbers are likely to soften further, in the remainder
of 2017, as a consequence of improved supply, in particular for hot dipped
galvanised material. High inventory levels throughout the supply chain and
significant import penetration from third countries will exert downward pressure
on regional values. Long product selling figures are expected to slip, as a
result of plentiful supply and sluggish demand, within the region.
MEPS expects regional prices, in Asia, for both flat and long products, to be
under negative pressure, in the second half of 2017, owing, mainly, to falling
mill raw material expenditure. In the near term, Chinese prices are likely to
remain volatile. However, regional mills may be reluctant to offer discounted
deals, as previous price gains, within the region, were modest, compared with
those in Europe and North America.
Despite the anticipated price falls towards the end of 2017, MEPS predicts that
global steelmakers, in particular flat product suppliers, will retain a vast
proportion of the gains that they secured since the beginning of last year.
Steel Review - June 2017 Edition
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