Whilst the market is still subdued for commodity steels, we are now seeing small signs of movement as critical projects are starting to moving forward and everyone is adjusting their projections to cope with a low oil price.
One of the hardest things to cope with as a resource producer is what the price will be in X years’ time when your facility comes on line. Traditionally, most companies invest at the top of the cycle when prices are high and cash is plentiful. Companies who are somewhat contrarian and who invest at the bottom then profit when prices rise again.
In many ways, the low steel price is almost as much a concern as the low oil price. This is being substantially driven by slowing growth in China and dumping has increased substantially this year such that very few mills are now making any profit at all. There is significant overcapacity, and barriers to exit are much higher as typically a mill that closes will destroy the economy of the town it’s based in.
We have taken advantage of this situation to increase our stocks of heavy plate. We now have more than 90,000 MT available ex stock with a significant improvement in our stock positions in wear-resistant and high yield steels. We are maintaining our leading market position in offshore plates and heavy ship plate (EH36) as well as the best HIC plate on the market Dicrest 5 from Dillinger Hütte.
As well as increasing the amount of steel that we stock, we are continuing to set expectations for the quality of our steel that is available from stock. We have now started stocking S355MF – tested to -60C as standard and expect that over time this will provide significant benefits to our clients as they focus on providing more value in design and engineering to their customers in turn.
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