Tag Archives: WORLD

MEPS PREDICTS MODEST UPTURN IN GLOBAL STAINLESS STEEL PRICES

The MEPS world average stainless steel price is expected to extend its slow recovery due to rising raw material costs and local supply tightness in several regions. The world average price for 304 cold rolled coil increased, marginally, this month, to a figure just 3.6 per cent below the number recorded one year ago.

Raw material costs are expected to grow, moderately, from their current levels. The LME average nickel price is forecast to be around 15 per cent higher in the coming year than in the previous twelve month period.

Transaction values in Asia are expected to be quite stable, in the next two quarters, before rising gently, boosted by inventory building, to a peak in mid-2017. Selling figures are likely to soften, in the summer months.

In Europe, increases in basis prices are likely to be restricted, over the next twelve months, by surplus production capacity and competition from imports. Predicted increases in mill input expenditure should lead to rising transaction values, in early 2017. A seasonal, downward price trend is anticipated as the summer holiday period approaches.

In North America, US government tariffs on Asian imports will continue to tighten supply of cold rolled coil and put upward pressure on basis figures. Anticipated rises in raw material costs should result in further increases in transaction values, during the first half of next year. The effective price for type 304 cold rolled coil is forecast to be 6 per cent higher, in August 2017, than this month’s figure.

Source: MEPS – Stainless Steel Review – August Issue

GLOBAL STEEL PRICE RECOVERY IS NOW UNDER THREAT

The MEPS world all products composite steel price soared by 13.8 percent, in May – the largest month-on-month increase, in percentage terms, for more than a decade.

In May, global steel values advanced for the fifth month in a row as European and North American selling figures continued to surge, by 19.3 percent and 13 percent, respectively, compared with those in April.

Chinese mill offers, both at home and overseas, continued their upward trajectory in late April but domestic transaction prices started to fall spectacularly, in early May, as local manufacturers ramped up production.

China’s National Bureau of Statistics confirmed that domestic crude steel production has been rising, since March, on a year-on-year basis.

Rapidly increasing domestic steel prices and improved financial results since the start of the Lunar New Year, encouraged Chinese producers to restart idled capacity.

It is widely accepted that underlying demand, in China and worldwide, remains broadly unchanged. Therefore, supply-side factors have been the main driving force behind the rapid rise in global steel values.

If China continues to boost production volumes, it is highly likely that steel selling figures will start to deteriorate around the world.

It is notable that many US market participants argue that Chinese exports only play a relatively minor role, domestically, as just 3 percent of US steel imports were of Chinese origin, in the first three months of this year. However, one US buyer remarked, this month, that if “China sneezes then the world catches a cold”. If Chinese domestic and, more importantly, export prices continue to slide, then no country, including the US, will be immune from the negative price scenario.

US steelmakers successfully filed trade cases for a number of flat products, giving domestic producers an opportunity to raise prices with little resistance.

However, market participants have repeated, this month, that if US selling values continue to rise, the domestic producers would “leave the door open” for buyers to find new import sources, that are not covered by trade petitions.

Moreover, if Chinese domestic and export prices continue to soften, other major exporters are likely to follow China’s lead and reduce their selling figures. This would make imports more competitive in global markets.

This may encourage buyers, especially in North America, where prices are some of the world’s highest, to return to purchasing from offshore sources. It would also put a brake on rising domestic selling figures in the near term.

Consequently, with no significant change in global steel demand expected for the rest of 2016, MEPS predicts that some of the price increases secured since the start of the year could evaporate.

Source: MEPS International Steel Review – May 2016 Issue

GLOBAL STEEL PRICES CONTINUE TO SLIDE IN DECEMBER

International steel prices remained under pressure, in December, due to sluggish global demand and high inventories.

In the recent issue of the International Steel Review, MEPS reported that world steel prices slipped further across flat and long product areas.

In North America, flat prices continued to weaken amid lacklustre demand domestically while a strong US dollar hampered exports. Buyers are delaying purchases as they prioritise their year-end stock positions.

Chinese spot prices have reached record lows with local producers selling excess stock at discounted prices. With demand slowing down domestically, China continues to pitch its exports at remarkably low prices. Subsequently, steel mills have cut domestic selling values in Taiwan and South Korea.

However, US flat prices may have bottomed out as many domestic steel mills have announced price increases for the first quarter. At this stage, it is unclear whether the price hikes will be accepted by the market.

Source: MEPS International Steel Review – December 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

SUBDUED STEEL MARKET SENTIMENT AS SUMMER LULL SETS IN

There is downward price pressure in most countries researched, in July. Fierce competition, between both domestic and third country suppliers, is intensifying. The upcoming summer holiday period in some nations is adding to the negative trading environment.

In the US, steelmakers appear to be bucking the trend witnessed in the global scene. Recently announced price rises are starting to filter through to the market, with increases recorded in local values for some strip mill products, this month. However, stock levels are elevated and domestic sales volumes are softening. The potential for further advances in transaction figures, in the near term, appears limited. There remains a heightened threat from imports, despite antidumping investigations now under way.

In Canada, the large inventory overhang is taking time to reduce. The domestic market is weak but the number of enquiries is growing. Customers are cautiously optimistic for the future.

In Japan, sales have slowed and inventory adjustment is yet to be completed. Local steelmakers are planning on cutting production, in the July/September period, in a bid to re-balance supply and demand. Import volumes were down and export sales were up, in May, year-on-year.

South Korean producers are supplementing poor domestic sales with increased shipments to overseas customers. However, this is upsetting suppliers in the importing countries and is attracting antidumping filings against them from some nations. Deliveries of third country material into the local market are slowing.

In Taiwan, major integrated producer, CSC, announced reduced list prices for September deliveries. As a result, market values have deteriorated, in July. Demand from foreign and domestic customers is weak.

There is negative pressure from CIS-origin material, in Poland. Nevertheless, prices have remained stable, this month, as domestic demand is reasonable for this time of year. Selling values have reduced in the Czech and Slovak markets. Sales activity is sluggish to many steel consuming sectors, with the exception of the automotive industry.

Prices in western Europe have deteriorated, in general, in July. Fierce competition from overseas suppliers is forcing domestic mills to lower their offers. Southern Europe is taking the brunt of the imports. However, material has been penetrating the northern markets, of late. Transaction figures could decrease further during the summer.

Source: MEPS International Steel Review – July Issue

WEAK MARKET FUNDAMENTALS KEEP STAINLESS STEEL PRICES IN CHECK

Stainless steel market activity remains subdued, around the world. Prices are quite stable. Transaction values, particularly for grade 304 material, edged upwards, in some countries, this month, as a result of the increase in LME nickel figures between April and May. Most European producers’ alloy surcharges, for type 316 products, were reduced in June, as molybdenum costs maintained their downward trend.

Consumption is sluggish, in all regions. On the positive side, car makers continue to record strong sales, while there are signs of increased building and construction activity in many developed countries. Meanwhile, the persistently low oil price has led to severely reduced investment in exploration projects. Sales volumes to the general manufacturing sector are yet to show any indication of the recovery that has been anticipated for some time. Speculators are cautious, especially in Europe, as they await some resolution of the Greek debt crisis.

Nevertheless, we have seen some small signs of encouragement. Basis values for coil products are too low to be sustainable, in the long term. Consequently, European producers have made clear their requirement for better returns on material for delivery after the summer vacation period. We have reports of some increases being agreed by buyers, already, and there are indications of further advances in the near future.

The medium-term outlook for nickel pricing is a matter on which market observers are not universally agreed. Many had predicted that, driven by the impact of the Indonesian ore export ban, global supply would slip into deficit by the middle of 2015. The prospect of this situation was expected to have an inflationary effect on nickel values.

In fact, a combination of weaker than anticipated demand and the utilisation of alternative raw material sources, by Chinese nickel pig iron producers, kept supply in surplus. As a result, commodity prices for the metal have been on a downward curve since the beginning of the year.

Nonetheless, miners and market analysts alike believe that most of the factors required for a supply deficit are falling into place. Consequently, nickel values are forecast to increase, steadily, over the coming twelve months.

Source: MEPS – Stainless Steel Review – June Issue