The MEPS Global All Products Composite Steel Price was US$713 per tonne in April – unchanged from the previous month. US strip mill product prices increased. In contrast, transaction values declined in the EU. Selling figures in Asia were relatively stable.
Following the successful implementation of last month’s US$30/40 per short ton rise, US flat product producers have announced a fresh round of increases of between US$25 and US$40 per short ton. Delivery lead times have extended considerably due to supply side disruptions. The lack of domestic availability is likely to keep import demand high. Severe winter conditions played a huge part in causing delivery delays and a general decline in sales during the first quarter. With spring approaching, the view is that market conditions will continue to recover.
There is still some resistance to producers’ efforts to advance prices in Canada but transaction values are starting to move up. The weak domestic currency is still deterring imports from the US. Supply is tight. Inventories continue to be low throughout the supply chain. Customers are cautiously optimistic regarding a slight uptick in consumption.
Expanding output continues to weigh heavily on the Chinese market, particularly as the pace of manufacturing growth has slowed. However, both mills’ and traders’ inventories continue to contract and a number of steelmakers will carry out maintenance this month, thus cutting output. Export volumes have surged. Producers are focussing on overseas sales but their profitability is still being squeezed due to an overall imbalance in domestic supply and demand.
Recently escalating domestic consumption in Japan is expected to decline over the next few months, following an April increase in sales tax, which is likely to deter consumer spending. For the moment, steelmakers are having to cope with higher outlay on scrap, energy and transport, with little likelihood of recouping these additional costs from customers. Moreover, imports are becoming cheaper as the firm demand in Japan attracts overseas traders. Volumes have climbed rapidly in recent months.
MEPS has noted no improvements in the South Korean situation. Selling values are flat and producers’ profits have tumbled. Demand is lacklustre amidst surplus supply which is the result of domestic overcapacity and an influx of cheap Chinese material. Output of flat products is forecast to shoot up even more during 2014. A lack of sales opportunities in an extremely competitive export environment is contributing to the overall problem.
In Taiwan, major steelmaker, CSC, has said it will keep official June list prices unchanged, following a small rise for the April/May period. This month, sales continue to be subdued as the traditional second quarter peak season demand from industrial sources appears slow to materialise. Selling values in the marketplace have eased downwards, partly as a result of ongoing import pressure from the Chinese mainland.
An imbalance in supply and demand has continued to be reflected in West European flat product prices. Despite optimistic macroeconomic indicators in several countries, customers are still hesitant to place orders. Last month’s sudden dip in raw material costs caused a negative reaction in the market. Now that the trend has reversed somewhat, we may see steel prices bottom out. Indeed, several buyers have commented that the mills have recently become quite resistant to granting further discounts.