US flat product transaction values continued to slip in October as many mills offered discounts to gain orders. Buyers were postponing the conclusion of deals in the hope of cheaper prices in the future. However, on October 28, AK Steel announced its intention to lift values by US$20 per short ton, with immediate effect. Demand has softened a little, partly for seasonal reasons. At the same time, availability has expanded, both from domestic and overseas sources. High prices in the US, relative to the rest of the world, have attracted a great deal of interest from steelmakers in other regions. Moreover, raw material costs are declining. Service centre inventories are also growing as their business slows.
In Canada, we have noted downward price movements on uncoated strip mill products. Buyers are expecting producers to be even more flexible when negotiations open for December deliveries. There is little optimism in the marketplace, with customers only purchasing for their immediate needs. Inventories appear to be steady, with no stock building.
Chinese steel consumption is contracting due to slower economic growth. This has put even more negative pressure on raw material costs and on the price of steel. Meanwhile, inventories continue to grow, both at the mills and in the marketplace. Traders are attempting to reduce their stocks. Consequently, steelmakers’ orders are reducing. Major producer, Baosteel, has announced that it will cut official ex-works domestic prices for strip mill products for deliveries in November. Overseas sales volumes hit record highs in September.
Japanese steel consumption continues to improve but much of the increased business is being picked up by importers. Indeed, in August, domestic mill orders were down by 3 percent, year-on-year, as export volumes also fell away. Flat product values were unchanged in October. However, Tokyo Steel has cut all official list prices for November delivery by ¥3000 per tonne to try to counteract cheap imports from China, despite higher energy costs. The company’s outlay on scrap has reduced considerably over the last few weeks.
South Korean producers are trying to cope with slowing economic growth and significant import pressure. In September, supplies of steel products from Japan increased for the first time in six months as the weak yen helped to push down prices. Chinese steelmakers are also gaining market share. The outlook remains pessimistic, with stagnant demand and oversupply, leading to further discounting this month. Producers are increasingly looking for export opportunities.
In Taiwan, local consumption is slowly recovering. However, major integrated producer, CSC, has announced that it will cut domestic list prices by an average of NT$646 per tonne (just over 3 percent) for December contracts, after three months of no change. Although this is a period when, traditionally, steel demand is at a peak, there is a great deal of competition from cheap imports, particularly of Chinese origin.