Global sheet/coil steel prices in decline

Posted on 01 August 2007


Transaction values for flat products in Canada continued to edge downwards during July. Demand is weak, with buyers reluctant to commit to forward orders as they concentrate on reducing stock levels. The continuing strength of the Canadian dollar is also impacting badly on pricing as US mills are actively selling across the border at competitive rates. Import volumes from elsewhere are still low.

Price movements for strip products are showing a negative tendency in China, due to a slowdown in demand and increased supply to the domestic market following the export tax changes. Sales have yet to show signs of improvement, despite the price decreases. Inventories of strip mill products are on the rise in Japan, where demand from machinery manufacturers and building construction is down on last year. Consumption by white goods and auto makers remains good, in spite of slower sales of cars to the home market. Total domestic stocks of coil held by the steelmakers and service centres, at end May, climbed by 2.9 percent - the third consecutive monthly advance. Quayside inventories escalated by 1.9 percent in the same time frame.

Due to maintenance work during the third quarter, South Korea's Posco will significantly cut export quantities of strip mill and plate products. Threatened strike action by the country's Metal Workers Union is unlikely to have much impact on steel output but could affect auto production. Demand is described as "stagnant" in the Taiwanese market at present. It is expected to pick up again in September/October when a round of new government spending begins. In general, prices remain at the higher numbers established last month for period three deliveries.

Poland's economic growth continues apace, driven by private consumption and investment. Business is also going well in the Czech/Slovak markets, despite the onset of the holidays. There is no real pressure from steel imports. Stocks are below average levels but there are no shortages. The price trend continues to be positive.

In Western Europe, higher inventories have led to subdued demand for period three. Although third country imports are not so aggressively priced at present, ArcelorMittal has changed the plan to lift strip prices by €10 per tonne. The company has announced that prices will be left at the second trimester level and that supply will be cut by 3 to 4 percent. Salzgitter was looking for a €15 per tonne rise and Corus was talking 5 to 12 percent. However, our research has shown either flat pricing or negative movements in all the countries reviewed.



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