Global Steel. world steel news

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


Global Steel. world steel news

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


Global Steel. world steel news

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


Global Steel. world steel news

MEPS – BRIC AVERAGE ‘ALL PRODUCTS’ STEEL PRICE UP 1.4 PERCENT IN MARCH

Developing Markets Steel ReviewThe MEPS BRIC average transaction price, measured in US dollars, increased for all eight finished carbon steel product types published in MEPS Developing Markets’ Steel Review.

The Brazilian steel industry remains upbeat over the general outlook for 2014. Long product steelmakers have adopted more aggressive pricing positions. Local stockists have resumed monitoring the domestic-import price differential as a result. The steel distributors association (Inda) has reported that imports of flat steel products totalled 123,780 tonnes in February – an increase of 7.7 percent compared with the corresponding period last year.

Russian trading houses have queried whether the latest domestic steel price levels are supported by market and economic fundamentals. Active buyers are booking for only immediate requirements due to continuing price fluctuations. Shipments to tube fabricators, OEMs and mechanical engineering companies have performed below expectations.

Indian distributors remain cautious about the strength of underlying consumption in the April-June period. Deliveries to downstream industries were disrupted by the Holi festival and the close proximity of the general election.

The Chinese steel industry expects the second quarter to be a challenging trading period. Profit margins have been eroded by the ongoing overcapacity problem and the volatility of raw material prices. The China Iron & Steel Association (CISA) has reported that the aggregate daily output of crude steel by the leading mills in the first ten days of March totalled 2.097 million tonnes – an increase of 0.6 percent compared with the corresponding period in 2013.

Source: MEPS – Developing Markets’ Steel Review


Global Steel. world steel news

LOW DEMAND KEEPS GLOBAL STEEL PRICES IN CHECK – MEPS

International Steel ReviewAfter offering small price reductions in mid-February, US flat product producers became increasingly aggressive as they tried to secure orders from customers amidst a weather-related decline in general demand. Manufacturing, construction and auto have all been affected by the extreme conditions.

In Canada, prices have softened and further weakness is anticipated in the second trimester. Mill order books are acceptable, with Dofasco quoting May delivery. The depreciating Canadian dollar continues to keep imports to a minimum.

Despite early spring being, traditionally, a peak season for manufacturing in China, that sector is experiencing weaker growth. This has created negative sentiment in the steel industry. Furthermore, overcapacity is weighing heavily on the market, both domestically and globally. On a more positive note, inventories are declining.

Recent Japanese sales have been driven by higher demand for houses, cars and electrical home appliances, ahead of a sales tax hike in April. Consumption has also been boosted by public works expenditure.

The South Korean steel industry is in the midst of a prolonged slump, causing producers’ profits to tumble. In a climate of lacklustre demand, the mills are grappling with surplus supply due to domestic overcapacity and an influx of cheap Chinese material.

In Taiwan, major steelmaker, CSC, has said it will lift official domestic prices by an average of 0.37 percent for the April/May period, following a 1.2 percent increase in March. Although sales were subdued in February, the company expects demand to climb in the second quarter, which is, traditionally, the peak season for industrial output.

Steelmakers would like to impose an April advance in Poland but buyers do not believe the move is viable, given the present state of demand. In fact, selling values have weakened again during March. Forecasts for steel consumption later in the year are cautiously optimistic. Although very few import deals have been concluded, rumours of cheap offers are influencing domestic pricing in the Czech/Slovak markets.

West European producers have, so far, failed to close deals for the second quarter at the target prices they initially announced. Falling input costs have hindered the mills’ aspirations. Moreover, offers from third country sources are becoming more competitive, although the lengthy delivery lead times involved are still considered to be a big risk in today’s market climate.

Source: MEPS – International Steel Review


Global Steel. world steel news

STEEP RISE IN NICKEL COSTS BOOSTS STAINLESS STEEL PRICES

Independent Stainless Steel PricesThe forecast upturn in demand for stainless steel did not materialise during the first quarter of 2014. As a result, basis figures, net of alloy adjustments, have risen very little, if at all. However, recent increases in nickel costs have lifted stainless transaction values and kick-started purchasing activity.

The recent rapid rise in LME nickel figures has shown how speculators on the commodities markets tend to react in a more volatile manner than raw fundamentals would suggest.

The Indonesian mineral ore export ban has had a small effect since the beginning of the year, causing prices to climb slightly. However, other, conventional nickel producers have stepped up their output in order to reduce the shortfall. In fact, as MEPS has previously written, nickel supply continues to be in surplus relative to current demand. Furthermore, significant excess inventories remain, in LME warehouses and in other stockpiles – notably in China.

The nervousness of speculators has been exacerbated by the recent unrest in Ukraine and Crimea, which has led investors to panic over the outlook for the international availability of nickel from Russia. Again, the reaction of the market has been disproportionate to the real threat to nickel supplies.

The result of this activity is that the LME Nickel Cash price rose by over US$2000 per tonne between 25 February and 26 March, an increase of over 14 percent. Several metals quoted on the LME tend to follow the same, technically-driven trading patterns. However, the copper price, for example, which often follows similar trends to nickel, fell by around US$600 per tonne, or 7.5 percent, during the same period.

As a result of the rise in raw material costs, austenitic stainless steel transaction values have advanced in recent months and are likely to continue to do so in the short term. In addition, many market participants report positive signs, reflecting that consumption will increase, either due to seasonal trends or because of genuine, underlying economic recovery. This, together with the input price inflation, may enable producers to lift basis values, too.

This combination of factors will lead to some contradictory behaviour. Some stockists will build their inventories, hoping to sell material quickly, at a greater margin, while prices continue to rise in the near term. Others, such as OEMs, may have replenished their stocks during the early part of the year, when selling values were low. Now, with no need to buy large quantities, they may minimise their purchases, in the belief that prices will decline again within a few months.

Source: MEPS Stainless Steel Review