Tag Archives: forecast

MEPS EU STEEL PRICE FORECAST

European flat products selling figures are expected to continue rising moderately, in the final trimester of the year. Local mills have hiked their offer prices because order books are reportedly full for the remainder of 2016. Furthermore, surging coking coal costs are exerting upward pressure on steel selling values. Moreover, supply from third country sources is limited, partially due to the implementation of antidumping duties.

MEPS forecasts relatively stable strip mill product prices in the early months of 2017. However, a negative trend is envisaged, by the beginning of the second quarter. Availability from domestic mills is likely to increase and imports should become more prevalent. Furthermore, raw material expenditure is expected to reduce in this period.

Source: MEPS – European Steel Review – October 2016 Issue

MEPS – EU FLAT PRODUCT STEEL PRICES RISE IN OCTOBER, FURTHER INCREASES FORECAST

According to MEPS, the upward momentum in average European strip mill product prices, reported in September, continued in October. ArcelorMittal announced new target prices for fourth quarter production that are higher than current market levels. Many buyers anticipate that they may be forced to pay more when future negotiations take place. Overall consumption is relatively stable but supply is limited due to a lack of imported material from third country sources, resulting from a series of trade defence measures on both hot and cold rolled coil, together with higher prices demanded by many overseas suppliers. Delivery lead times from European mills are extending into December/January, pushing buyers to secure tonnage for the start of 2017, earlier than usual.

German demand is healthy. End-users are positive regarding business levels in 2017. Strip mill product basis values continued to rise, as a result of restricted supply and extended delivery lead times. Although a number of buyers are not convinced that the whole of the recently proposed hike can be implemented. Service centres are recouping the mill increases in their resale prices. Their stocks, especially of cold rolled and galvanised coil, are on the low side.

In France, October market activity was subdued but rising prices boosted mill order intake. Steelmakers implemented further increases, with more upward movement expected in the near term, when negotiations for the first quarter 2017 are concluded. We note much less imported material on offer. Buyers report that European mill delivery lead times are now similar to those from overseas producers.

Tight supply forced basis values up in Italy. Traditionally, the region has been particularly dependent on imports. Local steelmakers claim to be fully booked for 2016. Overall, industrial production has slowed but a number of sectors continue to recover, including automotive, mechanical engineering and tube manufacturing. Nevertheless, service centres struggle to lift their resale values in line with mill hikes. Sales are slow, as demand is mediocre.

The recent sharp fall in the pound sterling, against the euro and US dollar, resulted in significant upward movements in flat product prices during negotiations for the first quarter 2017, between UK customers and mainland European suppliers. Distributors reported better sales in October than in August/September. The majority of service centres continue to apply the mill increases and, consequently, margins are reasonably good on most products. Stocks are low due to supply shortfalls.

Belgian distributors reported improved activity in early October. It was possible to apply recent mill hikes to first half 2017 supply contracts. Steelmakers were well booked for December/January production with prices continuing on an upward trend. Imports are available from South Korean and Indian suppliers but the prices are similar to those from European sources.

Ongoing constrained supply led to higher basis numbers in Spain. Despite announcements from some steelmakers to the contrary, a number of buyers do not expect to pay more for January shipments. Distributors complain that their customers are resisting increases. Demand is stable. Competitively-priced imports are on offer from several third country sources not affected by current antidumping measures, typically Turkey, India, Egypt and Brazil. MEPS understands that a number of deals have been concluded, for arrival February 2017.

Source: MEPS – European Steel Review – October 2016 Issue

NEW RECORD GLOBAL STAINLESS STEEL OUTPUT FORECAST FOR 2016

Annual global stainless steel production for 2015 is estimated to have totalled just below 41.5 million tonnes. This is approximately 0.5 percent less than the all-time high figure, achieved in the previous year. MEPS predicts that worldwide output will increase by around 2 percent, in 2016, to a new peak figure of 42.3 million tonnes.

Production during the second half of 2015 fell slightly short of earlier predictions. The outturn in all of the traditional stainless steel making regions, with the exception of South Korea, was lower than in 2014. The rate of growth in China slowed but output from the countries classed as Others continued to expand strongly, reaching a total of more than 4.1 million tonnes.

After years of rapid development, Chinese production in 2015 is estimated to have fallen back, a little, from the previous year’s total. Following extensive capital investment, during the twenty-first century, production capacity far exceeds domestic consumption. Global demand is sluggish and several governments have imposed import tariffs on Chinese material. Consequently, some private steelmakers are withdrawing from stainless steel production and further closures of less efficient facilities are foreseen. Nevertheless, China continues to produce more than 50 percent of the world’s crude stainless steel. MEPS predicts a moderate, year-on-year, increase of around 1.7 percent in the country’s output for 2016.

Japan’s outturn in 2015 is estimated to have been just over 3 million tonnes, which is substantially lower than the previous year’s figure and represents a drop of around 25 percent from the all-time high achieved in 2006. However, we forecast that the outturn in 2016 will equate to a rise of more than 5 percent, year-on-year.

South Korea’s production grew strongly, by around 9 percent, year-on-year, in 2015. However, we do not anticipate any significant, further increase in the coming year.

Stainless steel output in Taiwan fell back, slightly, in the last twelve months. A small increase, of around 2.7 percent, compared with the previous year, is forecast for 2016.

Producers in the United States recorded a marginal decrease in output, in 2015 compared with the year earlier figure. A moderate recovery is predicted, in 2016, to a figure of around 2.4 million tonnes.

Despite applying antidumping duties to some imports from the Far East, European Union production slipped by around 2 percent, year-on-year, in 2015. MEPS expects output, this year, to return to around the 2014 figure, at 7.25 million tonnes.

Source: MEPS – Stainless Steel Review – January Issue

MEPS EXPECTS GLOBAL STEEL PRODUCTION TO DECLINE BY 1 PERCENT IN 2015

We believe that worldwide crude steel output will be reported at 1.65 billion tonnes, this year. This equates to a decrease of 1 percent, compared with 2014. It is the first fall since 2009 – in the wake of the financial crash. Production gains in India and the European Union are likely to be outweighed by reductions in China, Japan, Ukraine and the United States.

Blast furnace ironmaking is forecast at 1175 million tonnes in 2015 – down 0.5 percent on the year earlier figure. Direct reduced iron production is also expected to slip marginally in the current twelve month period.

MEPS Crude Steel Production Forecast (Million Tonnes)
2014 2015(f) YoY % change
EU 169.3 172.0 1.6
Americas 166.2 159.0 -4.3
China 823.0 816.0 -0.9
India 86.5 90.8 5.0
Other Asia 227.6 221.7 -2.6
Rest of World 194.6 190.5 -2.1
Total 1667.2 1650.0 -1.0

Source: MEPS World Steel Outlook Quarter 2-2015

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

MEPS PREDICTS AN AUTUMN RECOVERY FOR EU STEEL

The MEPS – All Products Composite EU Carbon Steel Price has fallen to a 51 month low in June, this year. Further sEUPressmall reductions are possible in the coming months. However, an upturn in steel selling values will be highlighted in the June issue of the company’s m onthly report, European Steel Review and the On-Line Steel Price Forecasting Service.

According to MEPS, the market is likely to continue to be plagued by low priced offers from steel producing countries in Asia and CIS, in the short term. Negative price pressure, from customers wishing to share in the mills’ declining steelmaking raw material costs, could also play its part. In contrast, inventories across the supply chain are modest. End users have been restricting their steel purchases, of late, to just those for immediate requirements. Buyers are holding out for possible lower offers in the coming weeks/months. For similar reasons, service centres have not been making speculative purchases.

MEPS expects mill activity to decrease over the summer months as the producers engage in plant maintenance. Supply of finished steel products is likely to weaken. The combination of reduced steel supply and lower inventories is expected to lead to some shortages after the holiday period. Customers will, almost certainly, start to place orders for new material as demand picks up. With fewer inventories through the steel supply chain, the mills should be able to obtain steel price increases in the latter part of the summer.

Source: MEPS – European Steel Review

Also See: MEPS – EU Steel Prices Online