MEPS GLOBAL STEEL PRICE DECLINES BY 25 PERCENT, YEAR-ON-YEAR, IN AUGUST
Between the summer of 2014 and April
2015, hot rolled coil selling figures, in the US, lost a third of their value,
according to MEPS. Mills have gradually pushed through small increases in
transaction values since that point. Large volumes of imports and subdued demand
have restricted price advances. In fact, some negative pressure has begun to
creep back into the market, this month, due to declines in scrap costs and
subdued purchasing activity during the holiday period. Mill delivery lead times
remain short. Recent filings of trade cases are likely to make buyers more
cautious when purchasing third country material. However, a strong US dollar
could keep imports elevated in the short term. Consequently, prices could fall
further in the fourth quarter, despite mill efforts to raise them.
Selling figures, in Canada, followed a similar downward trend to those recorded
in the US. However, strip mill transaction values have failed to recover since
bottoming out in the second quarter. The depreciation of the Canadian dollar
could provide some upward price pressure in the short term.
In China, steel values have declined significantly over the past twelve months.
Falling costs of iron ore and weakening demand were the main drivers behind the
reductions in transaction figures. Domestic mills increased export volumes in a
bid to boost crude steel production utilisation rates. However, this has led to
numerous trade cases being filed by countries across the world. Nevertheless, a
recent price revival has been recorded, in August, for most product forms. A
devaluation of the renminbi is expected to stimulate overseas sales. This is
unlikely to be sufficient to prevent local prices declining in the short term as
sales to Chinese customers are expected to slow in the coming months.
Prices in Japan have dropped since August 2014 for all products researched.
Domestic demand has reduced following the change to the country’s consumption
tax, in April last year. Robust export volumes, of late, have enabled local
mills to keep flat products’ transaction values stable since the second quarter
of 2015. Weak market conditions are expected to continue in the near term with
the potential for price cuts over the next few months.
In South Korea, steel selling figures have been on a downward path since May
2014. There appears to be very few positive signals in the flat products
domestic and export markets, at present. Consequently, we expect prices to fall
further in the short term.
Significant year-on-year decreases have been recorded in Taiwanese transaction
values, in August. Domestic demand is poor and there is increased competition in
overseas markets. This is likely to remain the case for the remainder of 2015.
Further price deterioration cannot be ruled out, despite selling figures, for
hot and cold rolled coil, now being at their lowest point since the middle of
Flat products’ transaction values in western European countries have declined
moderately since August last year. Falling raw material costs and large volumes
of imports continue to exert negative pressure on an oversupplied market. The
economic climate is improving, however, and sales to local customers are slowly
picking up. Nevertheless, we expect domestic selling values to soften during the
remainder of this year due to the competitive market environment.
Steel Review - August Issue
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