STAINLESS STEEL PRICES FORECAST TO RISE IN EARLY 2015

Stainless steel business activity is, generally, at a low level, in Europe. With alloy surcharges falling in December and set to rise in January, some speculative purchasing may have been expected, this month. In fact, sales volumes have been disappointing and, in some countries, coil basis values have slipped.

While low oil prices have boosted consumer spending, they have had a seriously negative effect on exploration investment, particularly in the UK and Norway.

European mills are likely to seek basis price increases in the first quarter of 2015, if not in January. Producers and traders are hopeful of increased tonnages next year but there is a widely held belief that volumes will be similar to those in 2014.

Impending antidumping measures are limiting European demand for coil from Taiwan and China. This has combined with the strong US dollar to make the United States a more attractive market to Asian producers.

The US economy is strengthening. There is growing stainless steel sales activity and longer delivery lead times, especially for cold rolled coil. However, there has been no positive movement in coil basis values, even as the alloy surcharge has slipped.

Asia continues to record slowing growth and has a substantial surplus in stainless steelmaking capacity. Producers have supported prices by limiting their output, in recent months. Business activity is expected to remain at a relatively low level until after the Lunar New Year holidays.

Nickel values are forecast to rise, moderately, in 2015. China’s output of nickel pig iron is set to decrease as its stockpiles of Indonesian laterite ore become depleted. Inventories are currently estimated at about 7 million tonnes and material is being consumed at around one million tonnes per month. This will be exacerbated, in the short term, by a slowing of the supply of ore from the Philippines, due to seasonal weather conditions.

In the longer term, global supply and demand for nickel are predicted to be in balance in 2015, with increasing year-on-year deficits thereafter, as output from new nickel production facilities fails to match the growth in demand.

Source: MEPS – Stainless Steel Review – December Issue

MEPS GLOBAL STEEL PRICE DOWN TO FIVE YEAR LOW IN DECEMBER

The current price premium for flat products in the United States, over figures in other parts of the world, continues to attract imports, placing downward pressure on domestic transaction values. Producers are still keen to lift selling figures but their proposal for a US$20 per short ton hike has, so far, not come to fruition as customers see the mills’ raw material costs slide. The consumption outlook is healthy but, at the moment, service centres are experiencing a seasonal slowdown in sales activity. Supply is more than adequate. Inventories are moderate to high and domestic mill delivery lead times for standard products are short.

Offshore material is still entering Canada but the price differential with domestically produced material is no longer as significant because overseas suppliers are worried about incurring ‘dumping’ penalties. Service centres are keeping inventories steady and only buying for orders already on their books. Demand on distributors is described as inconsistent, except for auto and energy applications. Resale values are under threat.

Ongoing weakness on the raw materials side continues to create negative price pressure in China’s steel market. There is softening domestic demand in the face of slow manufacturing growth. At the same time, output has been climbing. In reaction to a stubborn glut of material in the local market, producers are looking increasingly to overseas sales. Export volumes hit a new high in November. However, prices declined, giving rise to complaints from a number of countries.

Recent statistics showed that a fall in business spending had plunged the Japanese economy into deeper recession in the three months to September. Apparent steel consumption fell in October by almost 7 percent, year-on-year. In the same time frame, imports increased. They have been climbing now for twelve months in a row, with the main competition coming from China and South Korea. However, local producers are selling more overseas, although most export prices have fallen over the last two months. On the home market, selling values have stabilised.

Steel from both domestic and overseas sources continues to flood the South Korean market, weighing heavily on selling values. Lower iron ore prices are also driving figures down. Although total imports fell in November, month-on-month, they are still a major cause for concern. Currently, Chinese material accounts for over half of foreign arrivals.

Demand in the Taiwanese home market has weakened. Major integrated producer, CSC, reported a drop in November shipments of almost 9 percent. Downstream mills and finished goods manufacturers are facing growing competition in export markets as the Japanese yen and South Korean won devaluate rapidly against the US dollar. Local steel prices are under pressure, not only from cheaper overseas offers but also from declining input costs.

Polish service centres report that activity has slowed ahead of the holidays. Effective numbers are unchanged, for now, in euros but are slightly down in zloty terms due to the recent strengthening of the local currency. The general economic situation has improved in the Czech Republic, albeit in a hesitant fashion. In Slovakia, growth has now surpassed pre-crisis levels. In both countries, steel prices have weakened a little. However, pressure from Russia has retreated, mainly because the order quantities required by producers in that country are generally too large for East European customers to finance. Sales are stable at a low level.

West European demand remains lacklustre as many clients try to minimise their inventories before the close of the financial year. Although the mills tried to resist calls for lower prices, in the majority of cases, they failed. Values have continued to fall, following the trend in raw materials. Offers from Asia are not particularly competitive at present but supply from domestic sources is plentiful.

Source: MEPS International Steel Review – December Issue

DEVELOPING MARKETS HIGHLIGHTS – FROM MEPS INTERNATIONAL LTD

The business environment remains challenging in the Brazilian steel market. Local service centres plan to persevere with conservative inventory levels next month. There is reluctance on the part of end-users to commit to forward orders.

Russian steelmakers are faced with a dilemma of whether to ride out the difficult domestic trading conditions, or downgrade planned production targets. The strength of the US dollar against the Russian rouble has only exacerbated the situation. Local trading houses intend to maintain cautious buying positions next month.

The Indian steel industry is divided over the prospects for local steel demand and price direction in the first quarter of 2015. Difficult trading conditions persist in the Chinese steel market.

Ukrainian steelmakers are finding it difficult to fill order books. Shipments to industrial companies have continued to deteriorate in the trading period surveyed.

Price volatility has undermined market sentiment in Turkey. Underlying demand for finished steel products has fallen short of industry projections – particularly, from construction firms and pipe fabricators.

Procurement activity in the United Arab Emirates was weaker than forecast in the period surveyed. Emirati rolling mills opted to reduce their selling figures owing to the difficult market conditions and strong price competition from foreign sources.

Business sentiment remains subdued in South Africa. Local stockists expect sales volumes to stay muted over the holiday shutdown period.

Mexican transaction values have edged higher over the last month. Distributors are holding off purchasing until January to see how demand develops.

Source: MEPS – Developing Markets Steel Review – December Edition

GERMAN STEEL PRICE ROUNDUP FROM MEPS INTERNATIONAL LTD

Hot rolled coil basis figures have softened in Germany, according to the latest report by MEPS. Expectations for next year are poor as the economy is not performing as well as anticipated. There is little confidence in the marketplace. The pipemakers report reasonable activity but their margins are being squeezed by growing overseas competition, particularly from China.

In the commodity plate market, service centres are buying only what they need to cover immediate orders. They have been keeping inventories under control for some time and, now, many are destocking. Steelmakers are starting to lose some of the gains made at the end of the third quarter, partly due to intense import pressure.

Distributors are pushing for cold rolled coil price cuts on the back of softening raw material costs. Domestic suppliers have reduced their offers. There has been no revival in demand.

Construction-related demand for hot dipped galvanised coil is static. The auto industry is holding up, although sales of cars to Russia have dropped sharply in recent times. Basis numbers in the general market have succumbed to downward pressure, due to oversupply.

Mills have maintained their low carbon wire rod prices again this month but customers are calling for decreases. Recoil values have succumbed to negative pressure from declining scrap costs. In addition, the finished mesh market is very competitive at present.

Structural section sales volumes are poor where there is strong competition for the little business that is available. Nevertheless, suppliers have held on to prices during recent deals but some slippage could occur in the first trimester.

The rebar market is very competitive. Buyers have successfully pushed for lower prices as scrap values continue to drop and further decreases cannot be ruled out in a climate of subdued demand.

Steelmakers have failed to resist customers’ calls for merchant bar basis price cuts, for the third consecutive month. Purchasing activity remains cautious as buyers monitor the constant negative trend. There has been no recovery in business levels.

Source: MEPS – European Steel Review – December Issue

BELGIUM STEEL PRICE ROUNDUP FROM MEPS INTERNATIONAL LTD

Belgian hot rolled coil basis numbers are below those of a month ago, according to MEPS. Delivery lead times are short. Slit coil, that can be delivered very quickly, is extremely cheap, leaving very little margin for the distributor.

Third country import competition has impacted on commodity plate values in December. Domestic steelmakers have conceded another small discount for cold rolled coil during recent settlements. Chinese imports are competitive.

Drawing quality wire rod numbers have been rolled over from November. Steelmakers are not busy as demand is slow. Opportunities for export sales have allowed steelmakers to maintain structural section prices, in spite of cheaper scrap. However, resale margins are being cut.

In the rebar market, distributors are being very cautious and keeping inventories down as steelmakers continue to give away the advantages of cheaper scrap. There is also a threat from Turkish imports. Consumption of merchant bar is down in 2014. We have noted negative price movements since November.

Source: MEPS – European Steel Review – December Issue

NORDIC STEEL MARKET ROUNDUP FROM MEPS

Steel prices have recently held up better in the Nordic region than in continental Europe, according to MEPS. However, consumption of hot rolled coil is limited leading to increased competition between suppliers. The level of sales, in Sweden, has been boosted by demand from the construction sector due to the continuing mild weather.

Market activity, for cold rolled coil, is decreasing. Customers are trying to minimise their inventories as the year end approaches. Prices are falling more slowly in Scandinavia than in the rest of Europe. Supply chain participants in Finland think that the market will be strengthened by the rationalisation arising from the merger between SSAB and Rautaruukki.

The commodity plate market is weak. The conflict in Ukraine continues to adversely affect the exports of agricultural equipment. Local markets are subdued for makers of farming machinery and other engineering concerns.

Wire rod producers and customers will close for two weeks around Christmas and the New Year. This may help to balance supply and demand. Order intake, in Sweden, has been adversely affected by the precarious position of the new government. Structural section prices have recently edged downwards as a result of decreasing scrap costs. However, buyers expect producers to seek higher prices in the near future.

Suppliers expect to shift significant tonnages of rebar in December. However, with scrap costs reduced, rebar values have slumped. Demand remains fair, in the parts of Norway where wintry conditions have not arrived. Merchant bar consumption is disappointing. Sales volumes have decreased as the year-end approaches. Declining raw material costs have contributed to reduced selling values.

Source: European Steel Review Supplement  – December Edition