THE MEPS NORTH AMERICAN FLAT PRODUCTS STEEL PRICE BOTTOMS OUT IN NOVEMBER

HOT ROLLED COIL

MEPS has noted a further small decline in US transaction values since their October report. However, having scaled back production in line with reduced demand, the US mills are now trying to implement transaction price increases for December business. Inventories at the distributors and end-users are very thin at present and import offers are relatively uncompetitive. Canadian customers have been holding off ordering in the hope of obtaining discounts and their initiative appears to have been successful. Business is very cut-throat with transaction figures already falling to $C580 per tonne. Given the cost of raw materials, there is likely to be a determined effort to move transaction numbers back up in the first quarter 2011.

HOT ROLLED PLATE

US plate transaction numbers have staged a minor recovery during November. Nucor is attempting to secure another $US30 per ton hike as soon as possible, since scrap costs are rebounding. However, sales of commodity plate continue to be hit by poor consumption in the badly performing building industry and it is not immediately obvious that the rise will stick. However, there is very little import pressure. Canadian demand is fair from a number of end-user markets but sales to the construction sector are depressed. Some further transaction price declines have taken place, with producers conceding a $C60 per tonne decrease. They will push for an advance in December.

COLD ROLLED COIL

MEPS has noted further erosion in US transaction values since October. However, producers are now pushing strongly for increases. Nevertheless, end-user demand remains subdued, other than for auto sheet. Service centres continue to keep stocks to a minimum. There is no sign of any growth in the Canadian market in the near-term. Customers’ inventories are steady but some distributors would prefer to see them at an even lower level. Local mills are competing with each other quite aggressively for the little business that is available, putting further downward pressure on prices.

COATED COIL

The automotive sector remains healthy in the US, creating strong demand for coated steel. In contrast, sales to the badly performing construction industry are depressed, leading to further negative movements in spot market hot dipped galvanised and electro-zinc coated coil transaction values. Producers are hoping to implement a $US30/40 per ton advance in December. Although Canadian galvanised steel figures were lower in November by 8.5 percent compared to October, it looks as if they have hit the bottom. Several mills have closed their December rollings and are seeking modest rises for January 2011 deliveries. However, distributors report that business has slowed earlier than normal in the run up to Christmas. End-users are mostly pessimistic about market conditions, at least for the next few months.

WIRE ROD

US producers look set to take advantage of low end-user inventories and a lack of import competition to claw back their higher scrap costs. Several mills have recently announced a $US20/25 per ton increase, effective December 1. In Canada, domestic mill activity is relatively dull because the whole business climate is lacklustre. After picking up briefly in October, selling figures are now following a downward path.

MEDIUM SECTIONS AND BEAMS

The trading environment in the US structural steel market is so lethargic that the producers have decided to keep December transaction prices flat, despite an increase of $US20 per ton in the raw materials surcharge. MEPS believes there are no signs of any recovery in the non-residential construction sector and companies have more than sufficient stock to meet current consumption. In Canada, domestic mill bookings are very light and distributors’ stocks are at record lows. As expected, transaction values have tumbled and could decrease even further in December.

REINFORCING BAR

Rising outlay on scrap is the driver behind bids by the US mills to lift transaction values at the start of December. Market participants believe the proposals will be successful due to domestic output restrictions and limited, attractive offshore offerings. Consumption remains patchy but there are some reports of improvement. In Canada, order intake at the steelworks is very poor. The recent price decreases have not generated any better demand. In fact, the opposite may be true while buyers wait for further downward movements. Sales are expected to deteriorate even more over the next few months for seasonal reasons.

MERCHANT BAR

The major US producers will add a scrap surcharge increase of $US20 per ton to all sales, effective December 1. However, current demand is dismal, with distributors and end-users refusing to build inventories. After moving up during early October, Canadian transaction figures have gone into reverse. Sales are sluggish.

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

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