US flat product transaction values have shown a steep decline over the last month, in the wake of high volumes of cheaper imports and overblown service centre inventories. Domestic mills, experiencing a notable lack of orders, have started to compete on price with overseas suppliers. Dropping mill input costs are softening the blow for some steelmakers. Distributors are purchasing very cautiously as they watch transaction figures plummet. Their resale values are also tumbling as they offload excess stock.

Although auto activity is still strong in Canada, distributors are scaling back their order placement as they wait for steel prices to bottom out. Moreover, oil and gas related sales are declining. This, together with the falling outlay on input costs, has forced steelmakers to make substantial transaction price cuts.

The Chinese economy is showing signs of moderating growth. Steel orders have been cut due to slowing manufacturing activity. This has badly impacted steel prices, which have posted significant losses since MEPS December report. There have been a variety of views on the implications of the government’s decision to withdraw the VAT rebate on exports of some boron-added items. However, it seems likely that steelmakers are already looking to exploit other loopholes.

There is concern in South Korea about the growing volume of foreign steel arriving in the country. This material, as well as steel from domestic sources, continues to flood the market, weighing heavily on selling values, which have undergone further negative developments this month. Falling raw material prices are also driving figures down as customers call for discounts.

Taiwan’s integrated producer, CSC, reported declining sales revenue in November, compared with the previous month, but shipment volumes were slightly up in December. Downstream businesses, anxious about their ability to compete in global markets, have been ordering less. In the marketplace, flat product transaction values are falling.

In Poland, strip mill product prices have decreased when measured in euros. Buyers report that the lower figures are valid until the end of March, although producers are trying to talk them up. Business is quiet in the Czech/Slovak region, following the holiday. Steel demand is still at a low level but is better than a year ago. The mills have yet to make any official price announcements for 2015. Buyers do not believe they will ask for any rises, even in the second quarter. Service centres are purchasing cautiously because of tepid demand.

Source: MEPS International Steel Review – January Issue