Market conditions are not favourable for the Canadian mills who are laying off workers. Production utilisation rates have fallen to around 45 percent with domestic order books in poor shape. Although customers’ inventories are dwindling, buyers are still limiting their purchases. Nevertheless, strip mill transaction prices are starting to hold, albeit at very low levels. However, a major cause of concern is the credit worthiness of customers.

Chinese flat product values have started 2009 on a positive note. Several mills that had cut output are now restarting their production, encouraged by the demand boost caused by the government’s fiscal stimulus package. In contrast, steel exports continue to contract and overseas sales of manufactured goods are also declining due to the global economic crisis. The market will officially close between January 25 and 31 for the Chinese New Year celebrations but many companies are winding down earlier than this.

Japanese steel demand is falling rapidly, due to the slump in all the major consuming sectors. The mills have deepened their output curbs to match declining sales and to try to improve the massive stock overhang. Inventories of strip mill products held by local steelmakers and distributors, as end November, moved up by 2.1 percent compared to October. Quayside stocks of imported flat products decreased marginally in the same time frame, despite fears that the strong yen would encourage overseas mills to push more steel into the Japanese market.

As demand from South Korean steel consumers looks as if it will weaken further, Posco is considering stepping up its production cuts for the first half of 2009. The company has said it plans to keep domestic prices unchanged for the foreseeable future. A small revival is expected in the Taiwanese market, where recent limitations on output have tightened supply. In addition, more export opportunities are anticipated after the Lunar festivities because Chinese mills are putting up their prices to Asian customers, making Taiwanese material more attractive. CSC has delayed negotiations with overseas customers for February/April deliveries until after the holidays.

Polish steel demand is described as “not very high”. Exports of steel intensive manufactured goods fell rapidly throughout the final quarter of 2008 and further deterioration is predicted for this year. ArcelorMittal has applied lower basis prices this month for hot and cold rolled coil. In the Czech/Slovak markets, domestic values have followed developments in adjoining countries as local mills lost the struggle to stop the slide. Producers are now carrying some excess material. Resale profits are dropping as service centres try to off-load stock in order to generate cash.

In Western Europe, many steelmakers and manufacturers took much longer breaks than usual over the Christmas/New Year holiday period because of the current economic downturn. Consequently, business was slow in the steel market at the start of 2009 with few transactions concluded.

Source: MEPS – International Steel Review http://www.meps.co.uk/viewpoint01-09.htm 

In the flat products category, our July forecasts are little changed from the previous month. Transaction values are expected to continue climbing from September onwards. An increase in the price of oil products, electricity and railway freight costs in China are likely to put upward pressure on selling figures throughout the second half of this year. Asian mills are also likely to push through further advances in a bid to recover the higher cost of iron ore since the conclusion of the 2008 annual contracts. Posco is due to begin work on the Gwangyang mini mill in October. Consequently, there will be reduced export quantities from South Korea during the fourth quarter. This could help to restrict supply across the region. As such, steel selling figures are forecast to rise faster over this period.

For remainder of article please go to www.meps.co.uk/steel-price-forecast-asia7-08.htm

Material is hard to locate in Germany with delivery lead times of around six to eight weeks for commodity grade products. Only small quantities are being offered by non-EU mills and the prices are not interesting to German customers. Buyers tried to purchase ahead as they saw values constantly escalating and now business is starting to decline, particularly demand from construction. Projects may be cancelled due to the expense of steel.

Remaining article can be seen at www.meps.co.uk/keynote7-08.htm

US transaction prices continue to spiral upwards, although recent increases are more moderate. Nucor has announced a relatively small rise of $US30 per ton for August deliveries. Service centres are keeping inventories at minimum levels as their sales activity is slow. End-users, who are suffering because of the weakening economic climate, are maintaining very low in-house stocks and purchasing only for their immediate needs. Nevertheless, supply is vastly reduced. There is a lack of imports, caused in part by high sea freight rates and a weak US dollar.

The Canadian mills report that order intake is still strong and that they are operating at full capacity, despite concerns over manufacturing industry suffering due to high steel costs. Imports and future permits for overseas steel remain low and this reduced pressure has helped the local producers. Distributors’ inventories are declining. Steelmakers expect that steel values will climb even further as the scrap situation fully impacts the market.

Remainder of article appears at http://www.meps.co.uk/viewpoint6-08.htm

Domestic supply by the EU mills was down in the first quarter by almost 4 percent compared to the same period in 2007. Inventory building in the second half should lead to a figure for the full year at a similar level to that in the previous twelve months.

Japanese production was 10 percent lower, year on year, in the first trimester. Further output curbs are being put in place in mid-year. However, inventory replenishment may occur in the latter months – leaving the annual crude outturn 4 percent down on 2007.

US domestic output held up quite well during the first quarter. This situation should continue for the remainder of this year. The import threat was limited in the early months but may increase slightly. Nevertheless, we predict a similar outturn in 2008 to that recorded in the previous year.

For complete article go to http://www.meps.co.uk/editorial6-08.htm  

For complete article go to www.meps.co.uk/article-key-out-q1-08.htm

Source:  www.MEPS.co.uk