Tag Archives: 2013

DECLINING EU STEEL PRICES OFFSET BY FALLING MILL INPUT COSTS – MEPS INTERNATIONAL LTD

Steel prices have been under negative pressure so far this year. The MEPS – EU Average Flat Products Composite Steel Price decreased by almost 7 percent in the first half of 2014, compared with the corresponding period in the previous year. However, European Steel Reviewraw material costs have also reduced. The price of iron ore fines (Fe 64%, FOB – Brazil) has fallen by 24 percent and coking coal has declined by 9 percent. The strengthening of the euro against the US dollar has made the reductions even more pronounced.

Customers have been able to secure the majority of, if not all, the mills’ cost savings. However, steelmakers have managed to prevent any further deterioration in their margins. Analysis by MEPS indicates that the conversion margin between raw material costs and flat product steel prices was unchanged in the first half of 2014, on a year-on-year basis.

Steel demand is expected to rise, moderately, in 2014, following decreases in the previous two years. A number of end-user segments are showing better performance. According to ACEA, registrations of passenger cars and commercial vehicles, in the first half of this year, increased by 6.4 and 9.2 percent, respectively. The building sector is gradually improving as financial constraints slowly ease. Better weather conditions helped to boost activity. Data published by Eurostat shows that production in construction grew by 6.5 percent in the first quarter of 2014, year-on-year.

European mills have seen their order intake rise. Figures from worldsteel indicate that steelmakers increased crude steel output by 3.8 percent in the January/June 2014 period, compared with one year earlier. MEPS foresees a slowdown in the rate of growth in the second half – leaving the annual outturn 2.5 to 3 percent higher.

The outlook for flat product prices until the year-end is fairly dull. Steelmakers are expected to push for increases. We believe only modest rises will be achieved, barely covering an anticipated slight rise in the cost of raw materials. However, the conversion margin should hold up, assuming that the mills prevent any further deterioration in their selling figures and input expenditure does not rise significantly. In the latter part of 2013, steel transaction values contracted by more than the reduction in raw material costs, resulting in lower margins in that period.

Modest price growth is envisaged in 2015. The MEPS – EU Average Flat Products Composite Steel Price is forecast to increase by 2.7 percent, compared with the estimated annual average in 2014. Raw material expenditure is also expected to escalate. Significant capacity expansion by global iron ore suppliers should keep prices of fines suppressed but growth is projected for the cost of coking coal and scrap. Consequently, the mills’ conversion margins are expected to be broadly unchanged next year, relative to 2014.

Source: MEPS – European Steel Review

WORLDWIDE STAINLESS STEEL OUTPUT TO TOP 40 MILLION TONNES in 2014 – MEPS INTERNATIONAL LTD

Global crude stainless steel production is predicted to reach a new record annual total of 40.2 million tonnes, in 2014 as reported by MEPS. This would exceed the previous high figure, set last year, by 5.7 percent. Output is expected to grow in all of the major stainless steel making countries and regions.Stainless Steel Review

Some of the established stainless steel producing areas are performing more strongly than had been anticipated. Output in the EU, in the first six months of this year, is estimated at around 4 million tonnes. A twelve-month total of 7.55 million tonnes is forecast, representing a year-on-year increase of 5.7 percent.

Output in the United States, in the first half of 2014, has also outstripped our previous forecast. The annual outturn for the year is now predicted at 2.1 million tonnes, an increase of 3.4 percent over the 2013 figure.

The recovery in Japan continues at the expected rate. Production in the period from January to June is reckoned to be 1.65 million tonnes. A similar figure is anticipated for the second half of the year, to give an annual total of 3.3 million tonnes – 4 percent greater than in the previous year.

South Korean production is predicted expected to turn out at 2.15 million tonnes for the whole of 2014. This equates to a 1.9 percent increases over last year. Our forecast for stainless steel output in Taiwan, this year, has been uprated to 1.125 million tonnes – a year-on-year advance of 4.1 percent.

Expansion in the emerging economies will continue at a higher rate than in the traditional areas. Chinese production has exceeded expectations during the first half of 2014 and is anticipated to expand by 6.4 percent year-on-year, to achieve an annual figure of 20.2 million tonnes – more than half of the global total.

Crude stainless steelmaking in the rest of the world is predicted at 3.775 million tonnes, this year, giving a growth rate of 7.8 percent over the 2013 total.

Source: MEPS – Stainless Steel Review – July Issue

MEPS PREDICTS ANOTHER RECORD HIGH FOR GLOBAL STEEL PRODUCTION IN 2014

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