Nordic Flat Rolled Steel

SEASONAL LULL IN ACTIVITY KEEPS STEEL PRICES IN CHECK – MEPS INTERNATIONAL LTD

US flat product transaction values are currently slightly lower than those reported in June, according to MEPS. However, some minor upward pressure has been noted in recent weeks. Mills in the mid-west still have relatively long delivery lead times due to supply problems earlier in the year plus scheduled outages at US Steel and ArcelorMittal. Moreover, there is excellent demand from the auto sector. Manufacturing is strengthening and construction is improving. Although overseas material is very International Steel Reviewcompetitively priced at present, possible protectionist moves by the US government are creating a great deal of caution amongst both traders and potential customers, regarding forward ordering of material from third countries, primarily China.

With the exception of hot rolled coil, Canadian transaction figures are holding firm but there are some mitigating factors. The reline of ArcelorMittal’s Chicago furnace has led to orders being moved to Dofasco, pushing delivery lead times out by two to three weeks. Demand remains sluggish and cheaper, offshore material has arrived, with more to come. Inventories remain on the low side.

There is still a supply glut in China as production remains high. Consequently, prices have continued to head downwards since MEPS last report. However, overall inventory levels declined in June. A recent stimulus plan, combined with new infrastructure projects, is expected to support steel consumption over the coming months. Export volumes continue to grow, year-on-year, as producers cut overseas quotations to boost trade.

As the economic recovery continues in Japan, domestic order intake rose in May, year-on-year, allaying fears that April’s increase in consumption tax would cause serious damage to steel consumption. In contrast, export volumes were still declining. Imports continue to grow, despite a weak yen. Flat product market prices are firm.

Stagnant demand and oversupply have led to discounting in South Korea. Economic forecasts have predicted a slowing of growth in the second half of 2014. This creates a gloomy outlook for the steelmakers who are also having to contend with a great deal of import competition. The mills are looking to overseas markets to offload their surplus capacity.

In Taiwan, major integrated producer, CSC, will leave domestic list prices for September contracts unchanged after decreasing them for the July/August period. The third quarter is, traditionally, a time of low demand because of the rainy season in South East Asia. However, the company has started to see signs of recovery and does not think it is necessary to cut prices further.

Polish activity is no better ahead of the summer vacation. Due to changes in the exchange rate, effective values have increased slightly in the local currency. This represents unchanged prices in euro equivalent terms. The Czech economy is slowly recovering, as is consumer confidence. Steel output is expanding as industrial sectors show signs of growth. However, selling values remain under negative pressure.

Activity in the West European market is quiet ahead of the holidays. Although consumption is strengthening in several countries and economic indicators are good, producers, keen to book orders, have agreed further small price reductions. Customers point out that the mills have relatively low raw material costs and cheaper third country imports are readily available.

Source: MEPS International Steel Review – July issue


STEEL PRICE GROWTH LIMITED IN EMERGING MARKETS – MEPS INTERNATIONAL LTD

According to MEPS latest steel report – Developing Markets’ Steel Review, the Russian steel industry remains optimistic over the prospects for consumption and production in the third quarter of 2014. Long product steelmakers have delayed releasing their August basis quotations.Developing Markets Steel Review

Uncertainty continues to unsettle business confidence in India. The monsoon rains have been heavier than expected. Internal steel producers have resisted offering discounts and more favourable payment terms, fearing such measures would be counterproductive and only fuel further price instability.

In China, business confidence has weakened in recent weeks. Local stockists are booking for immediate requirements only, due to continuing price fluctuations and the arrival of the rainy season.

Ukrainian distributors have struggled to adapt to the unpredictable business environment. Shipments for construction and infrastructure projects remain scarce.

Turkish steelmakers have had mixed success in their efforts to advance higher transaction values to distributors. Price support from external demand is limited.

Demand for construction steel in the United Arab Emirates has been deflated by the close proximity of the summer and Ramadan periods. It has also 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 third quarter of 2014. Underlying demand is expected to be driven by shipments to the automotive and construction sectors.

Source: MEPS Developing Markets’ Steel Review


GERMAN STEEL PRICE ROUNDUP FROM MEPS INTERNATIONAL LTD

There has been some downward pressure detected in the German hot rolled coil market, according to MEPS. A number of service centres have financial difficulties as end-users press for reductions. Consequently, they in turn, are calling for discounts from the mills.European Steel Review

MEPS has noted a small downward price correction for commodity plate. However, recent statistics have revealed that stocks at the service centres fell during May by over 5 percent, month-on-month, and that the quantities sold by distributors were up by around 9 percent.

Cold rolled coil demand remains satisfactory but, with the exception of the auto industry, there is no significant improvement. There is plenty of Russian material on offer but domestic suppliers have maintained basis figures at the June level.

Auto production is going well with good local sales and a healthy export market, especially in China and the USA. However, the carmakers are trying to reduce their steel costs wherever possible, so distributors who serve that sector complain of poor margins. Construction related sales of hot dipped galvanised coil are fair. In the general market, basis numbers have weakened slightly, due to oversupply.

Low carbon wire rod producers have held on to selling figures for the fourth consecutive month. There is little activity in the recoil market, where values are unchanged, despite buyers’ calls for discounts.

In the structural sections market, suppliers have been forced to concede a €20 per tonne discount during recent settlements. Sales are subdued and supply is in excess of demand.

Rebar prices are unchanged from a month ago. Sales volumes are running at reasonable levels, with construction output forecast to grow throughout 2014.

The mills have again succumbed to calls for further discounts for merchant bar. Purchasing activity is cautious as buyers are unsure of future price movements. The hope for improvement in business levels has not materialised, so far.

Source: MEPS European Steel Review

 


STEEL PRICES UNDER NEGATIVE PRESSURE IN NORTHERN EUROPE – MEPS INTERNATIONAL LTD

MEPS research reveals that strip mill product selling values have decreased, across the Nordic region, in euro terms, during July. Consequently, mill profit margins have been squeezed. Demand for hot rolled coil remained stable at a low level. The producers’ European Steel Supplementsales volumes are expected to pick up, after the summer break. Overcapacity persisted in the cold rolled coil market. Competition between the distribution businesses of SSAB and Rautaruukki continued to keep prices under negative pressure, before the details of their merger were finalised. Sales of galvanised material to the automotive sector remain fair. Demand is expected to remain steady throughout the summer and market participants are hopeful of an upturn thereafter.

Sales tonnages, for commodity plate, were steady in Denmark and Sweden as suppliers attempted to maximise orders in advance of the slowdown during the holiday period. Market sentiment was less positive in Finland. As a whole, prices were unaltered across northern Europe.

Structural section selling figures decreased, in euro terms, despite strong consumption in some countries. Activity in the Swedish rebar market was robust as several major projects were in progress. On the other hand, there was little infrastructure investment in other countries researched. As a result, ex-mill prices were lower, month on month. There is expectation that public spending will increase in the near future. Transaction values, for merchant bar, decreased in July. Demand from the manufacturing sector was at a good level in Sweden. However, we noted a seasonal slowdown in business activity in other Scandinavian countries.

Source – MEPS European Steel Review Supplement – July 2014 Edition


EU STEEL MARKET PRICES CONTINUE TO WEAKEN AHEAD OF THE HOLIDAYS – MEPS INTERNATIONAL LTD

Activity in the European flat products market is quiet ahead of the summer holidays, according to MEPS research. Although consumption is strengthening in several countries and economic indicators are good, producers, keen to book orders, have agreed to further small price reductions. Customers have called for lower basis values, citing the mills’ relatively low raw material costs and the availability of cheaper third country imports.European Steel Review

As the domestic auto sector is busy, German steelmakers have strong order books from those companies. However, other industrial sectors are only performing at a level comparable to last year. Distributors are reducing resale values in order to compete for business. Buyers are of the opinion that further minor weakness could develop over the next six to eight weeks.

Activity remains weak in the French market, where end-users have short order books and are worried about the situation in September. They are, therefore, unwilling to order material now. There will only be a slight increase in orders for September delivery because underlying consumption is poor. As a result, basis values have eroded further, despite mills’ efforts to stabilise them

Market sentiment in the Italian steel sector is very negative. After the Italian mills decided to drop basis values to encourage orders, buyers report that their quotations are now being met by some North European producers. End-users are worried about their stock levels as all hopes of demand improvement, forecast earlier in the year, have been dashed.

UK service centres report they have a wide range of busy customers. Distributors’ sales volumes are well up on 2013 and, for some, the best in several years. Nevertheless, mill prices remain low. Indeed, they have continued to drift downwards, due to the strength of sterling, which is serving to attract material from mainland Europe and further afield.

There have been no major changes in the Belgian market, where demand is flat. Distributors report that end-users are endlessly shopping around to get bigger discounts. Stockholders from neighbouring countries are also competing for business. Delivery lead times from the steelmakers are extremely short.

There are signals that the Spanish economy is slowly reviving. New projects are coming on stream and some of those that were postponed during the financial crisis are being reactivated. It could be well into the final quarter before this improvement makes itself felt in the domestic steel industry, which, currently, is quite dull. Suppliers are, therefore, looking continually to export markets.

Source – MEPS European Steel Review – July Edition


Global Steel. world steel news

SWEEPING CHANGES NEEDED TO CHINESE STEEL SECTOR – MEPS

China’s steel industry is in need of radical reform. It has become bloated. Similar occurrences developed in North America, Europe and Japan in the latter part of the last century. In all cases, to solve the problem it was necessary to embark on China Steel Reviewpermanent factory closures to bring supply and demand nearer into balance. Such a solution was extremely painful for the workforces.

Governments needed to be involved to oil the wheels and provide the necessary funds for generous payouts to staff that lose their jobs. New investment, in the regions affected, was also necessary to stimulate modern industries and create employment. Encouraging mergers and acquisitions as the vehicle for efficient rationalisation also assisted in creating an efficient sector. The plan will work only if all three policies are initiated together.

Creating jobs in new and growing sectors of the Chinese economy would be much more sensible than preserving them in the large number of inefficient steel mills. The government would be required to provide the funds for payments to the workers affected and to provide capital for new ventures.

Can the authorities afford to sit back and wait for a solution to appear? Further investment in infrastructure projects is being planned and will help. However, continued rapid spending on capital projects is not the long term solution.

China’s economic growth is expected to fall to figures between 7 and 7.5 percent, this year and next, according to the latest estimates from both the IMF and OECD. These numbers may appear substantial by standards of developed nations. However, for China, they are very poor compared with results since the beginning of the 1990’s.

The steel sector is under negative pressure now that the real estate market is in decline. Steel prices are weak and mill profitability almost non-existent. The steelmakers are required to invest in air and water anti-pollution measures.

Overcapacity exists and the mills are oversupplying the domestic market. The steelmakers are increasing export sales in an effort to minimise the problem. The current situation in the Chinese steel sector is a mirror image of those that existed in the other major economies in the 1980’s and 1990’s but the numbers are much bigger. However, the dilemma is not confined to the mills alone. Action needs to be taken to modernise the archaic and inefficient steel distribution mechanism.

Source: MEPS China Steel Review