THE MEPS NORTH-AMERICAN STEEL PRICE
DROPS 4 PERCENT IN JULY
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.
HOT ROLLED COIL
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.
HOT ROLLED PLATE
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.
COLD ROLLED COIL
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
MEDIUM SECTIONS AND BEAMS
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
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
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