SEPTEMBER STEEL PRICES IN CHINA AT LOWEST SINCE APRIL 2009

The MEPS “All Steel Products Composite” dealer price in China hit a 53 month low in September this year. With weakening demand and continued oversupply, the October figure is likely to be down even further. In fact, it may be January before any notable recovery takes place.

Much of the steel price erosion in China has been the result of significant cuts in the cost of steelmaking raw materials, which commenced in the early months of this year. The reduced input costs have not improved the financial prospects of the Chinese mills, however. Many of them are suffering from large debts which need to be funded. Furthermore, a significant number are facing huge costs for emission controls and other environmental issues. Subsidies are keeping many steel companies in business.

The growth rate in local demand is slowing. The steelmakers are keeping output at a reasonably strong level by increasing the volume of exports. These are less profitable than domestic sales. Oversupply is preventing the steel producers from increasing their margins.

Chinese domestic steel prices have been in retreat for the past twelve months. The MEPS “All Products Composite figure” for China declined by 15 percent between September 2013 and 2014. Chinese steel selling values have been below the figures recorded at the time of the global economic crisis for the last five months.

The situation in China is in stark contrast to that in all the other major steel producing parts of the world. The downturn in other regions has been much less dramatic during the last twelve months.

In North America, strong economic growth has prompted higher steel demand. This has helped the steelmakers to push up average prices for their products by 5 percent over the past year. This developed in spite of substantial decreases in international prices for steelmaking raw materials.

Since September 2013, the average domestic steel price in the European Union has declined by 6 percent. This reduction is smaller than that which occurred in China, despite weakness of the euro relative to the US dollar – making raw materials more expensive in the national currency.

The savage reduction in Chinese domestic prices so far this year, and probably in the months to come, will have serious consequences for steelmakers in other parts of the world. Exports from China will become more competitive in international markets. In turn, this will put negative pressure on local steel selling values and threaten any recovery in demand.
Source: MEPS China Steel Review – September Edition

FLAT FOURTH QUARTER PREDICTED FOR STAINLESS STEEL MARKET – MEPS

According to MEPS, stainless steel sales have been surprisingly subdued since the summer holiday season. Most market participants predicted an upturn in demand during, what is traditionally, one of the busiest periods of the year.

While a few niche sectors have reported strong results, most sellers of stainless steel have found the past month, or two, very quiet indeed. This, in turn, has had a restricting effect on selling values. Both basis figures and surcharges were expected to contribute to rising transaction prices in September and October. As it transpired, basis values in Europe, for example, were little changed, this month, and, notwithstanding the wishes of the mills, substantial increases in October are unlikely.

Mediocre demand has, certainly, played a part in the situation. An upturn in manufacturing activity in the developed world, which has been anticipated for some time, has continually failed to materialise. In fact, countries such as Sweden and Germany, whose industrial activity has held up better than most, since the Global Financial Crisis, are now showing signs of slowing down.

This has been exacerbated by the weaker-than-forecast nickel price trend. Market participants were aware of a possible ban on unprocessed ores by the Philippines – similar to that imposed earlier this year by the government of Indonesia. This would possibly lead to a global shortage of nickel in the medium term. However, it was announced, in early September, that no such ban would be enacted in the foreseeable future. This outcome precipitated a negative outlook for nickel values, as the LME cash figure fell by 13.5 percent in two weeks.

As a result, nickel costs decreased at a time when many people had anticipated an upward curve. This has coincided with the recent agreement of lower chromium prices for the fourth quarter. Although next month’s alloy surcharges are slightly higher than September’s, transaction values in October are likely to represent an underwhelming high point until the, still-predicted, uptrend in the first half of 2015.

Source: MEPS – Stainless Steel Review – September Issue

US STEEL MARKET ROUNDUP FROM MEPS INTERNATIONAL LTD

US hot rolled coil delivery lead times remain at four to six weeks, according to MEPS. Demand is moderate to good, with the exception of the construction sector which is slow to recover. Domestic production levels are high. Transaction figures were steady in August but weakened recently, partly due to the availability of cheaper imports.

Hot rolled plate makers have recently announced another hike. This has been badly received by the consuming industries. Customers feel that, although the market is relatively good, high inventories at the service centres and the onset of winter do not support a rise. Delivery lead times are down to eight/ten weeks. Conditions are expected to remain strong into November. The biggest concern for steelmakers is whether the influx of offshore material will upset the balance between supply and demand.

The threat of anti-dumping law suites are keeping many potential buyers from importing cold rolled coil. Consumption, particularly by the auto sector, remains good.

Coated coil transaction figures were unchanged in August, but, more recently, imports have created downward pressure. However, buyers are cautious in regards to ordering overseas material because of the threat of anti-dumping suits.

Producers briefly lifted prices, for wire rod, in August but the move was short-lived. Current figures are similar to those in July. Demand from the construction sector is steady but many customers have sufficient stocks of Chinese and Turkish material at present. Order intake at the domestic mills is slow.

Wide flange beam prices remain flat. There has been no push from scrap costs and demand is somewhat subdued as service centres are looking to reduce inventories before the year-end.

Demand for rebar is healthy, with good order intake at the domestic mills. Turkish material has become a little more expensive. The US government has decided not to impose dumping duties on rebar imports from that country.

Merchant bar transaction figures have weakened marginally compared with July/August. The market is not strong enough to support a rise. Turkish suppliers are offering angles at a slightly higher price than in July.

Source: MEPS International Steel Review – September Issue

Shanxi Taigang Stainless Steel commissions the successfully revamped 80-ton Duplex RH-TOP plant No. 1 from SMS Mevac

After the successful commissioning of the new 80-ton Duplex RH-TOP plant No. 2 (Ruhrstahl Heraeus process) in last April, Taigang Group International Trade Co., Ltd., and the plant operator Shanxi Taigang Stainless Steel Co., Ltd. (TISCO), both located in Taiyuan, China, have successfully revamped and commissioned the existing 80-ton Duplex RH-TOP plant No. 1.

SMS Mevac, Germany (www.sms-mevac.com) supplied the new RH plant and revamped the existing one in cooperation with its consortium partner SMS Siemag Technology (Beijing) Co., Ltd.

Shanxi Taigang Stainless Steel can now use both 80-ton RH-TOP plants for the refining of various high-quality steel grades with low levels of hydrogen. The plants will primarily be used for the treatment of steel for electric sheet production.

In both plants, the vacuum is generated by a four-stage steam-ejector vacuum pump with variable pressure reduction (RH-SC) for optimized process control.

SMS Mevac’s scope of supply for this project included nearly the complete basic engineering, the main part of the detail engineering, the delivery of key components for the mechanical, electrical and instrumentation equipment, the complete level-1 and level-2 automation systems as well as supervision of installation and commissioning.

Source: SMS Group

SMS Mevac RH-TOP plant in operation.

SMS Mevac GmbH is a company of the SMS group which, under the roof of the SMS Holding GmbH, consists of a group of global players in machinery and plant construction in steel and nonferrous metals processing. Its workforce of more than 13,800 employees generates sales worldwide totaling EUR 3.5 billion.

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MEPS – GLOBAL STEEL PRICE FALLS FOR FOURTH CONSECUTIVE MONTH

Despite a recent slight softening in US flat products transaction prices, they are still very high relative to the rest of the world, according to MEPS. This is attracting substantial volumes of imported material. Demand is slowly, but steadily, improving. However, supply has grown – not only from an inflow of offshore steel but also from domestic sources as capacity utilisation moves up towards 80 percent. Inventories are adequate for current conditions. Possible protectionist moves by the US government have created some caution amongst buyers but have not deterred overseas suppliers, so far.

Canadian mills report strong order books into October. The auto and energy sectors are performing well. Strip mill product prices are holding up. Service centre buyers are expecting a little price weakness in December, in the light of cheaper imports that are due to arrive before the close of the Great Lakes navigation. However, domestic steelmakers are doing everything in their power to keep selling values firm.

In China, Baosteel has announced it will cut major flat product official ex-works prices for deliveries in October, which is, traditionally, a peak month for steel consumption. Buyers were anticipating the decreases, which reflect sharp downward movements in the market place over the last two months. Meanwhile, output continues to grow and inventories remain in surplus. Export volumes are expected to expand, year-on-year, as producers cut overseas quotations to boost trade.

We have noted some recovery in domestic sales in the Japanese market since July, following April and June’s weakness. The supply/demand balance is likely to continue to improve over the next few months due to the upcoming peak business season. However, exports dropped again in July, year-on-year. Import volumes grew in the same time frame. The main source of the rise was supply from China. Flat product prices, with the exception of hot rolled coil, were unchanged in August and September.

The outlook for the South Korean steel scene remains pessimistic. Domestic producers are not only having to cope with the prospect of slowing economic growth in the second half of 2014 but are also trying to contend with significant import pressure. Chinese steelmakers are increasing export volumes, with their share of the South Korean market now well over 20 percent. Stagnant demand and oversupply have led to further substantial discounting. In Taiwan, major integrated producer, CSC, will leave domestic list prices for October/November contracts unchanged from those of September in order to counter cheap offers of material from China. Local consumption is slowly recovering.

Although Polish transaction values are unchanged in euro terms, they are slightly higher when measured in zloty due to currency fluctuations. Slab shortages, created by the crisis in Ukraine, are not affecting the production of strip mill products. Nevertheless, the mills are demanding price rises. In the Czech/Slovak region, the situation in Ukraine has negatively influenced supplies of raw materials and electricity. However, the outcome is not as bad as might have been expected. Market participants did not really anticipate any major developments in flat product demand, following the holidays, and this has proved to be the case.

In Western Europe, prices held steady through the summer. More recently, ArcelorMittal announced a proposed increase of €20 per tonne for all new business to be delivered in the final trimester. Nevertheless, most October orders have already been settled at the old prices. It remains to be seen whether the rise can be imposed for the remainder of the quarter. Most buyers believe that current consumption is not strong enough to support an advance, particularly as the producers’ raw material costs are reducing.
Source: MEPS International Steel Review – September Issue

FRENCH STEEL PRICE ROUNDUP FROM MEPS INTERNATIONAL LTD

In France, hot rolled coil prices are unchanged month-on-month according to MEPS. Negotiations are ongoing in many instances but buyers remain unsure that the higher price can be implemented.

Hot rolled plate basis figures are on the rise, following a significant reduction in volumes offered. German customers have been ordering large quantities in France, reacting to the slab shortages in Poland. This has led to expanding delivery lead times of nine to ten weeks.

Selling values, for cold rolled coil, are the same as those published in our July issue. Activity remains subdued.

The French vehicle manufacturers are faring slightly better than earlier in the year, which could help producers to lift coated steel prices. Consumption, in general, is tepid.

Prices for drawing rod are at the level reported two months ago. Those for the mesh quality are also the same as in July.

Producers are looking for an advance of €10/20 per tonne for Category 1 sections. This was still under negotiation at the time of MEPS research as many distributors still have sufficient stocks. The rise will be easier to secure on the larger sizes.

Construction activity is weak. Industry participants are still waiting for the government to implement measures to boost private construction. Public infrastructure is faring better. Producers have gained a modest, cost-driven price hike for rebar.

Merchant bar effective values are up through the application of the new size extras. There has been no revival in sales volumes.

Source: MEPS – European Steel Review – September Issue

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