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



World crude steel output is forecast at 1655 million tonnes this year, according to MEPS (International) Ltd. This equates to a rise of 2.7 percent over the previous all-time high figure in 2013. China will continue to be the main driver for expansion, despite a WSOPiedeceleration in growth.

Most regions saw their production fall last year. In 2014, noticeable gains are predicted in the EU and South Korea. Only marginally increases are envisaged in Other Europe, CIS and the Americas. Output rises in India are projected to be below the country’s vast potential. Solid expansion will continue in the Middle East, although the region’s share of global growth is expected to be just 3.4 percent.

Source: MEPS World Steel Outlook Quarter 2-2014


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


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


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


US flat product transaction values are steady at the level reported in May. Domestic capacity utilisation is spiking after the recent outages, although some scheduled maintenance is due soon at US Steel and ArcelorMittal. Underlying consumption is growing. Service centres are keeping stocks lean. There is no speculative purchasing. Consequently, any significant upturn in demand could cause positive price pressure.International Steel Review

A combination of the unfavourable exchange rate and sluggish demand is keeping Canadian transaction values in check but the softening that many buyers expected has not yet occurred. Supply and demand are largely in balance. Some imported steel has started to arrive, with more scheduled for July. However, a great deal is for contractual business, not for general resale, so inventories at the service centres remain low and prices reasonably firm.

So far, recent good economic news, in the form of a stronger PMI, has not generated any greater market activity in China. Domestic prices continued to head downwards, following the June 2 Dragon Boat Festival. They are being driven by excessive production capacity and falling raw material costs. Output hit a record high in May. Steel demand is, traditionally, weaker over the summer months as construction activity slows.

The move by Japan’s government to raise the consumption tax has negatively affected buying interest. Steel demand in April plummeted by 12 percent, month-on-month, and inventories grew. South Korean demand remains at a low ebb, although, according to local statistics, the main steel consuming sectors of auto, shipbuilding and construction performed better than expected, in the first quarter. However, recent economic forecasts predict that, in the second half of 2014, growth may be slower than previously envisaged.

Taiwan’s major producer, CSC, will cut official domestic list prices for the July/August period by an average of 1.64 percent, compared with June. This will be the first time since February that the company has reduced selling values. Falling raw material costs and sluggish regional demand were the reasons cited for the move.

In Poland, steelmakers want to lift prices in July by around €5 per tonne. Buyers are sceptical because activity is no better and is unlikely to improve before the summer vacation. Demand usually falls ahead of the holiday season. The Czech economy is slowly recovering, as is consumer confidence.

Activity in the West European flat products sector is unseasonably quiet. Although underlying demand is gradually improving in several countries, it remains a buyers’ market. Mills have reported heavier order intake lately, as consumption strengthens but supply is still in surplus and delivery lead times quite short.

Source: MEPS International Steel Review

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