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Home > MEPS Steel News - 02.08.2010


Flat product transaction values in the US continued their sharp decline in July. This has taken place against the backdrop of rising raw material costs in the third quarter. The mills are desperate for orders and are making price concessions for customers with large orders to place. In Canada, domestic mill activity is slow. Capacity cuts are anticipated in the near term to match the poor demand with supply. Several mills are shutting down for extended breaks in August.

Long products prices turned down in July in almost every country researched. Scrap costs tumbled in June. These reductions in input expenditure for the mills, coupled with generally weakening building and construction demand, resulted in lower selling values.


The US market for coil is weak. There are fears of a "double dip" recession. Mill orders are at a low ebb. Transaction prices have declined by in excess of 5 percent over the past four weeks. We detect few signs of an upturn in the near term. In Canada, mill activity is said to be fair. However, several plants are shut down for maintenance. A number of buyers believe that if prices decline much further, some mills will cease to produce because of the high input costs.


Plate selling figures in the United States continued to slip in July. Delivery lead times are reducing - reflecting the poor rate of consumption. Consensus from the market is for further price declines in the next few months. Import offers are becoming more competitive. Despite reasonable demand for hot rolled plate in Canada, transaction figures have fallen this month. This has been due to a greater import threat.


The traditional summer slowdown in steel buying activity has resulted in numerous holes developing in the millsí order books across North America. The steelmakers have become more aggressive in their attempts to build up satisfactory mill loads by cutting prices. Despite all these efforts there is a reduction in shipments. Discounts are available to anyone with a substantial order to place. Buyers are fearful of a double dip recession. Automotive demand is good in both the United States and Canada. Price reductions of approximately $US60 per tonne have been noted this month.


The US automotive sector remains quite strong. However, poor demand from house building and construction has led to price reductions for hot dipped galvanised material. Electro-zinc selling values held up at last month's figures. Canadian vehicle manufacturing is also quite buoyant. Nevertheless, transaction values in the general market slipped due to a lack of business for the steel producers. A number of buyers believe that prices cannot fall much lower because of rising mill input costs.


US wire rod transaction figures slipped in July. Sales to the auto sector were good. However, demand for the mesh grades (collected for this report) eased downwards. Further price reductions are anticipated by many as the cost of scrap fell in mid June. In Canada, domestic mill activity is slowing. Significant cuts to selling values were put in place this month. A modest rise in scrap costs occurred in mid July but they are, currently, well below the May/early June figures.


Price cutting continued in the US structurals market in July. Demand for new buildings is poor. No inventory replenishment is taking place. Further reductions in selling values are likely in the near term. Canadian prices also retreated this month. There appears to be little real demand and uncertainty persists. Fears of a double-dip recession are emerging in both the US and Canada.


US domestic mill activity is still soft. Market prices for rebar are down and more decreases are probable over the summer months. Raw material surcharges have reduced. Delivery lead times are extremely short. Consumption of steel in the construction sector is very low. June employment in this industry stood at a 14 year low. Significant price cutting took place this month in Canada as the mills attempted to encourage customers to place more orders. Unfortunately for them, inventories are up slightly and, therefore, this action may not prove fruitful.


The market for light sections in the US is poor. Distributors and end-users are not lifting inventories. Construction demand is flat. Mill selling values have slipped once again this month. The Canadian market is weakening. This has resulted in lower prices. We cannot see any prospects for rising demand in the country this year. The only potential for higher transaction figures would be from a rise in international scrap values.

Source: MEPS - International Steel Review - click here for a free sample copy.

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