VOLATILE REGIONAL STEEL PRICES BUT MEPS GLOBAL AVERAGE FIGURE STABLE

International Steel ReviewThe MEPS Global All Products Composite Steel Price was US$713 per tonne in April – unchanged from the previous month. US strip mill product prices increased. In contrast, transaction values declined in the EU. Selling figures in Asia were relatively stable.

Following the successful implementation of last month’s US$30/40 per short ton rise, US flat product producers have announced a fresh round of increases of between US$25 and US$40 per short ton. Delivery lead times have extended considerably due to supply side disruptions. The lack of domestic availability is likely to keep import demand high. Severe winter conditions played a huge part in causing delivery delays and a general decline in sales during the first quarter. With spring approaching, the view is that market conditions will continue to recover.

There is still some resistance to producers’ efforts to advance prices in Canada but transaction values are starting to move up. The weak domestic currency is still deterring imports from the US. Supply is tight. Inventories continue to be low throughout the supply chain. Customers are cautiously optimistic regarding a slight uptick in consumption.

Expanding output continues to weigh heavily on the Chinese market, particularly as the pace of manufacturing growth has slowed. However, both mills’ and traders’ inventories continue to contract and a number of steelmakers will carry out maintenance this month, thus cutting output. Export volumes have surged. Producers are focussing on overseas sales but their profitability is still being squeezed due to an overall imbalance in domestic supply and demand.

Recently escalating domestic consumption in Japan is expected to decline over the next few months, following an April increase in sales tax, which is likely to deter consumer spending. For the moment, steelmakers are having to cope with higher outlay on scrap, energy and transport, with little likelihood of recouping these additional costs from customers. Moreover, imports are becoming cheaper as the firm demand in Japan attracts overseas traders. Volumes have climbed rapidly in recent months.

MEPS has noted no improvements in the South Korean situation. Selling values are flat and producers’ profits have tumbled. Demand is lacklustre amidst surplus supply which is the result of domestic overcapacity and an influx of cheap Chinese material. Output of flat products is forecast to shoot up even more during 2014. A lack of sales opportunities in an extremely competitive export environment is contributing to the overall problem.

In Taiwan, major steelmaker, CSC, has said it will keep official June list prices unchanged, following a small rise for the April/May period. This month, sales continue to be subdued as the traditional second quarter peak season demand from industrial sources appears slow to materialise. Selling values in the marketplace have eased downwards, partly as a result of ongoing import pressure from the Chinese mainland.

An imbalance in supply and demand has continued to be reflected in West European flat product prices. Despite optimistic macroeconomic indicators in several countries, customers are still hesitant to place orders. Last month’s sudden dip in raw material costs caused a negative reaction in the market. Now that the trend has reversed somewhat, we may see steel prices bottom out. Indeed, several buyers have commented that the mills have recently become quite resistant to granting further discounts.

Source: MEPS – International Steel Review

DEVELOPING MARKETS’ STEEL MARKET ROUND-UP

In India, the Supreme Court has lifted the embargo on iron ore mining in Goa. Mining companies have been authorised to excavate a total of 20 million tonnes per annum. Meanwhile, flat product steel producers are under pressure to offer additional discounts and more favourable payment terms.Developing Markets Steel Review

Challenging trading conditions persist in Ukraine. Procurement activity by small and medium sized construction companies has stagnated across the country. Meanwhile, the European Union has removed import tariffs on several categories of Ukrainian industrial goods, including finished steel products.

Buying sentiment has improved in the United Arab Emirates. Local stockists are cautiously optimistic over the growth prospects for domestic steel consumption in the May-June period. It has become too risky for buyers to conclude any deals at this stage because of volatile import quotations.

Stable trading conditions are forecast in the Mexican market during the second quarter of 2014. Underlying demand is expected to be driven by shipments to the automotive and construction sectors.

Source: MEPS – Developing Markets’ Steel Review

FERROUS SCRAP MARKET ROUND-UP

Upward price momentum was witnessed in three of the four Indian regions researched by MEPS. Selling figures, in rupee terms, last reached current levels in May 2012. However, local traders remain cautious about the strength of underlying consumption in the interim – citing reduced activity during the country’s general election and the forthcoming monsoon season.Ferrous Scrap Review

In China, quotations have fallen back marginally from the levels touched in early trading. Domestic scrap traders have begun to query whether the latest settlement figures are supported by market and economic fundamentals. The negative sentiment has been fuelled by restrained end-user demand for finished steel products.

In April, Japanese electric furnace steelmakers increased their HMS2 purchasing figures, prompted by tight domestic supply. In early trading, Tokyo Steel Manufacturing, a bellwether for the domestic steel industry, lifted its procurement prices at all five subsidiaries. The upward adjustment was executed in three phases. Exporters based in Chubu, Kansai and Kanto expect the positive price trend to continue in the short term.

Effective price settlements increased this month for the three bellwether cut grades tracked in the United States. Low mill inventory and a shortage of material created a seller’s market. As for May, brokers acknowledge that the flow of obsolete and prime industrial grades into dealers’ yards will improve, which could lead to lower quotations. Exporters, operating out of East and West Coast ports, adopted aggressive pricing positions in early-April, underpinned by the strength of the domestic market and the mistaken belief of a revival in Turkish offshore demand. However, the positive sentiment was short-lived. The availability of low-cost semi-finished steel material and the strength of the US dollar had dampened both the price and tonnages for bulk cargos and containerised scrap – particularly, shipments to Asian clients.

Taiwanese mills, operating electric furnaces, persevered with conservative scrap purchasing policies during April, due to the recent downturn in key steelmaking raw material prices and slow domestic reinforcing bar sales. As for May, import tonnage is forecast to decline due to planned production cutbacks.

Arduous business conditions perist in the South Korean steel market. In May, Korean importers are expected to persevere with a wait and see attitude. The current initiative by US suppliers to lift prices is viewed as ill-timed, counterproductive and will only escalate purchases from alternative sources.

Source: MEPS – Ferrous Scrap Review

EUROPEAN STEEL PRICE MARKET UPDATE

An imbalance in supply and demand has continued to weigh heavily on European flat product prices. Despite optimistic macroeconomic indicators in several countries, customers are still hesitant to place orders. March’s sudden dip in raw material costs caused a negative reaction in the market. Now that the trend has reversed somewhat, we may see prices bottom out. Indeed, several buyers have commented that the mills have recently become quite resistant to granting further discounts.

Independent Monthly Steel Pricing in Europe
Independent Monthly Steel Pricing in Europe

Although the business climate is relatively good in Germany, steel prices have been under pressure because the market is being targeted by producers in other EU countries, where demand is more subdued.

There has been no improvement in French activity. End-user demand on the service centres is poor and resale prices are described as ‘awful’. Meanwhile, the mills have tried to resist downward price pressure as best they can.

In Italy, Ilva reduced prices for new orders due to competitive offers from China and a reduction in iron ore costs. Business activity is slow, with very few deals being concluded. Market sentiment is poor. There is a lack of demand from end-users. Consequently, service centres are reluctant to purchase new material. Buyers are postponing placing orders because they fear that the bottom has not been reached.

UK flat product service centres report that both demand and profit margins, in March, remained stable to good. However, mill basis figures began to fall when raw material costs declined but have steadied now. Nevertheless, buyers are sceptical that the, recently announced, June hike can be secured, due to oversupply.

In Belgium, the positive economic indicators are not reflected in distributors’ sales. There are many imports from Southern Europe that, even with relatively high transport costs, are very competitively priced. This has created negative pressure in the marketplace. Even though the mills are proposing an increase for June, buyers do not appear to be prepared to pay more.

Sentiment is starting to recover a little in Spain due to better economic forecasts for 2014. However, the steel market remains quiet and prices have continued to slump. Very little business was actually placed at the lower prices because, in late March, buyers believed further discounts were possible. Opinion has now changed because the mills have become reluctant to make commitments at those levels.

Source: MEPS – European Steel Review

NO PICKUP IN NORTH EUROPEAN STEEL DEMAND – PRICES SLIP AGAIN – MEPS

Steel sales volumes failed to increase in March and April, in northern Europe. Consequently, transaction values slipEuropean Steel Supplementped once again, in many countries, leaving profit margins for producers and distributors at a bare minimum. Although there have been some strong economic indicators in recent months, leading to optimistic forecasts, actual demand for steel has yet to pick up.

While demand for strip mill products is perceived to be improving in some countries, the market across Europe is subdued. Producers achieved some short term price advances in recent weeks but these were short lived. Mill input costs decreased during February and March and local prices were placed under further pressure by cheap import offers from Asia. MEPS Nordic Average transaction prices for hot rolled and cold rolled coil edged downwards in April.

Hot rolled plate values slipped again, this month, and remain under negative pressure. Prices continue to be affected by competition from Russia and Eastern Europe. Steel market participants perceive no sign of the economic growth suggested by government statistics. Buyers and sellers do not foresee a substantial pickup in demand or transaction values in the next six months.

The mild winter in northern Europe kept demand from the construction sector relatively steady, the seasonal pickup in spring is, consequently, less pronounced. In fact, purchase volumes for long products have been disappointing and selling values have dropped. Distributors are buying beams imported from South Korea in order to reduce their costs. This is having a negative effect on local market prices. Selling figures for rebar, agreed this month, have been lower than during March, due to earlier decreases in scrap costs. However, values for the raw material have increased in recent weeks. If this trend is maintained, prices could rise, in due course. Economic activity in Scandinavia is better than in much of Europe. Even so, merchant bar prices have been dragged down by the market in the rest of the continent.

Source: European Steel Review – Supplement, Nordic Steel Prices

MEPS CELEBRATES THE 30TH ANNIVERSARY OF EUROPEAN STEEL REVIEW

Over the past thirty years the steel industry has undergone massive changes. The selling price remains a key element inthe buyers’ decision making process. As the market has become more international, local mills are usually required to consider foreign competition when setting offers to domestic customers.

Independent Monthly Steel Pricing in Europe
Independent Monthly Steel Pricing in Europe

Important decisions for the management of manufacturing organisations are often associated with steel procurement. Selling values are also a key element to be considered in the operations of the steelmakers. Independently researched steel price data and market information is useful for both sides.

In 1984, MEPS produced its first carbon steel price and market report – European Steel Review. The main six countries in the EU9 were analysed. The pricing information and market insight proved to be popular. Several manufacturers started to use the published figures to create monthly indices to agree, with their customers, changes in their input costs. Such index pricing continues to this day.

After enlargement of the EU, similar research was conducted in a further six European countries and the results incorporated in a second carbon steel report. This was issued as a supplement to the original version.

In the mid 1990’s it became clear that the global steel industry was in a period of transition. Demand in the west was flatlining. Most of the growth in consumption was coming from Asia. Consequently, in 1995, MEPS started to provide a new report to highlight carbon steel price and market data in non-European markets. International Steel Review was born – with coverage in eight countries located across Asia, North America, and Eastern Europe.

Demand for stainless steel was starting to grow around the middle of the 1990s as new applications were being discovered. MEPS introduced its report, Stainless Steel Review, in 1997 to provide market information on this rapidly growing sector. Monthly data is provided for thirteen countries on three continents.

The world order for steel started to change at the beginning of the new millennium. New demand and capacity was being established in a number of emerging countries around the world, including a number in South America, Eastern Europe, Middle East, Africa and South Asia. MEPS responded to this change by introducing, in 2009, its fourth carbon steel report – Developing Markets Steel Review, adding a further eight countries to the portfolio.

Over the past 30 years China has developed into the largest steel producing and exporting country. As a result, in 2011, MEPS introduced a new monthly report dedicated to showing all the main activities of the steel sector and their influence on other countries.

April 2014 is also the 10th anniversary of the introduction of MEPS unique “on-line” regional carbon and stainless steel price forecasts.

Source: MEPS – European Steel Review