MEPS - GLOBAL STEEL PRICE FALLS FOR FOURTH CONSECUTIVE MONTH
Despite a recent slight softening in US
flat products transaction prices, they are still very high relative to the rest
of the world, according to MEPS. This is attracting substantial volumes of
imported material. Demand is slowly, but steadily, improving. However, supply
has grown – not only from an inflow of offshore steel but also from domestic
sources as capacity utilisation moves up towards 80 percent. Inventories are
adequate for current conditions. Possible protectionist moves by the US
government have created some caution amongst buyers but have not deterred
overseas suppliers, so far.
Canadian mills report strong order books into October. The auto and energy
sectors are performing well. Strip mill product prices are holding up. Service
centre buyers are expecting a little price weakness in December, in the light of
cheaper imports that are due to arrive before the close of the Great Lakes
navigation. However, domestic steelmakers are doing everything in their power to
keep selling values firm.
In China, Baosteel has announced it will cut major flat product official
ex-works prices for deliveries in October, which is, traditionally, a peak month
for steel consumption. Buyers were anticipating the decreases, which reflect
sharp downward movements in the market place over the last two months.
Meanwhile, output continues to grow and inventories remain in surplus. Export
volumes are expected to expand, year-on-year, as producers cut overseas
quotations to boost trade.
We have noted some recovery in domestic sales in the Japanese market since July,
following April and June’s weakness. The supply/demand balance is likely to
continue to improve over the next few months due to the upcoming peak business
season. However, exports dropped again in July, year-on-year. Import volumes
grew in the same time frame. The main source of the rise was supply from China.
Flat product prices, with the exception of hot rolled coil, were unchanged in
August and September.
The outlook for the South Korean steel scene remains pessimistic. Domestic
producers are not only having to cope with the prospect of slowing economic
growth in the second half of 2014 but are also trying to contend with
significant import pressure. Chinese steelmakers are increasing export volumes,
with their share of the South Korean market now well over 20 percent. Stagnant
demand and oversupply have led to further substantial discounting. In Taiwan,
major integrated producer, CSC, will leave domestic list prices for
October/November contracts unchanged from those of September in order to counter
cheap offers of material from China. Local consumption is slowly recovering.
Although Polish transaction values are unchanged in euro terms, they are
slightly higher when measured in zloty due to currency fluctuations. Slab
shortages, created by the crisis in Ukraine, are not affecting the production of
strip mill products. Nevertheless, the mills are demanding price rises. In the
Czech/Slovak region, the situation in Ukraine has negatively influenced supplies
of raw materials and electricity. However, the outcome is not as bad as might
have been expected. Market participants did not really anticipate any major
developments in flat product demand, following the holidays, and this has proved
to be the case.
In Western Europe, prices held steady through the summer. More recently,
ArcelorMittal announced a proposed increase of €20 per tonne for all new
business to be delivered in the final trimester. Nevertheless, most October
orders have already been settled at the old prices. It remains to be seen
whether the rise can be imposed for the remainder of the quarter. Most buyers
believe that current consumption is not strong enough to support an advance,
particularly as the producers’ raw material costs are reducing.
Steel Review - September Issue
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