Steel markets around the world are oversupplied relative to current demand. This, along with cheap raw materials, has resulted in the September steel price collapsing to its lowest level since February 2004.
US market conditions for flat rolled products continue to be challenging. The domestic steelmakers are faced with strong competition from imports, heightened by the strength of the US dollar. Imported tonnages, ordered before the recent filings of trade cases, continue to flood in. Volumes are expected to decline as time progresses. Overall demand, with the exception of the energy sector, is relatively good. Oversupply is the issue, leading to short delivery lead times and high inventories at the service centres. Moreover, low scrap costs are creating even more downward pressure on steel prices.
The Canadian economy is weak and steel market conditions are soft, especially in the energy and mining sectors. Mill order books are not full, despite brisk sales to the US, boosted by the weakness of the Canadian dollar. Flat product prices are stable, for now. Import volumes have slowed down. Service centres report steady business levels. As their inventories are quite high, a degree of destocking is underway.
The Chinese economy continues to slow, with a consequent impact on steel consuming industries. Oversupply continues to lead to a negative price tendency in the domestic market. Further pressure has been put on selling values by the ever-declining cost of raw materials. The supply glut at home, has forced the mills to offer even more substantial quantities to overseas markets.
In Japan, weak market conditions have resulted in price cuts, in September. In July, finished steel orders fell by 2.1 percent from the outturn in the previous year. Domestic demand decreased by 6.1 percent, as consumers, expecting price falls, refrained from purchasing. Moreover, business activity has still not recovered from the April 2014 consumption tax increase. Exports, in the same time frame, continued to rise, helped by the weaker yen.
Despite the depreciation of the local currency against the US dollar, South Korean exports do not appear to be increasing. Steel sales to overseas markets, in August, dropped by 17.0 percent, year-on-year. Meanwhile, imports jumped 14.0 percent in the same period, on stronger demand from the construction sector. Planned consumption tax cuts, from 5.0 percent to 3.5 percent, on autos and home appliances, should help to stimulate these markets, hopefully leading to stronger sales for the steelmakers.
In Taiwan, demand from foreign and domestic customers is weak. Major integrated producer, CSC, is preparing to lodge anti-dumping lawsuits against imports of steel from South Korea and China. Prices appear to be stabilising, following the deterioration that took place over the summer.