Steels – Economic News
|
In this section: home | A 516 | A516+HIC | A516+NACE | A387 other steels | economic news |
MEPS is a leading provider of steel market news and information. A number of recent articles are reproduced here with permission. All articles remain the copyright of MEPS.
22.07.2009
MEPS REPORTS A SLIGHT UPTURN IN EU STEEL PRICES
IN JULY
Demand and prices are strengthening in the European strip market as the destocking phase is all but over and buyers need to fill the gaps in their inventories. Delivery lead times are lengthening and a surge in third country imports is unlikely due to the competitiveness of domestic prices. Several major mills have told customers they intend to lift basis values for the third quarter. The proposed rises range from €20 to €30 per tonne. However, some companies feel the move is premature. There are concerns that producers may try to ramp up capacity too soon and that the market will be unable to absorb the increased supply, especially as the summer vacation is looming.
There are more enquiries now in the German market but they are mainly from customers looking for specific qualities and dimensions because they have run out of these items. Consequently, the mills have received a greater number of orders in recent weeks but volumes remain low. It is too early to say whether buyers will eventually accept the higher prices demanded. Certainly, some period three business has already been concluded at second quarter figures. Signs of improvement in real consumption are virtually non-existent.
In France, stock levels are returning to normal. Activity is picking up slowly, particularly in the auto sector, but many end-users are still suffering from the economic downturn. Offers from the mills are limited because of output curbs. As a result, most EU suppliers have announced price hikes for the July/September period. Values have remained stable, so far, but market participants believe that the proposed increases are likely to be implemented soon.
Business is not so bad in Italy. Activity has picked up quite suddenly. All, or most, of the surplus stock has been removed from the supply chain and customers need to purchase material again, although not in large quantities as consumption is relatively low. Companies are still struggling but the consensus view is that the worst is behind them. Riva has been able to push up prices as availability has been tightened by significant output cuts. Improvements in international markets have lessened import pressure.
Market signals are slightly more encouraging now in the UK. The mills are lifting prices. They have seen a spike in purchasing as customers run out of inventories and the production restraints of recent months have significantly restricted supply. However, market players fear it may be a "false dawn" because there are no signs to indicate any uptick in real consumption. Buyers generally have paid more for third quarter business due to limited availability, reportedly exacerbated by "production issues" at Corus that are causing deliveries to run up to two months late.
The Belgian scene has changed very little. Producers are claiming increases but customers believe the proposals to be too ambitious for the moment, since inventories have still not been cleared. Underlying demand has not improved and the general economy is weak.
Spanish distributors' stocks have been reduced to very low levels. Service centres report that enquiries have gone up a little, recently, but there are fears that the upcoming summer holidays will dampen this small revival. Nevertheless, stockists and end-users recognise that prices are firming. Most July/August business has already been booked at figures similar to the second quarter but September deliveries are likely to carry a premium as supply tightens. Import prices are still above local ones. Additionally, the tonnages that most customers require are not sufficiently large to warrant ordering overseas.
13.07.2009
WORLD STEEL PRODUCTION FORECAST TO SLIP BY
12 PERCENT THIS YEAR
MEPS
is forecasting total world steel manufacturing in 2009 at 1165 million
tonnes. This equates to a decrease of 12 percent on the previous year’s
result. There are a number of positive signs in the market. Steel
stock levels at both the distributors and mills are extremely low.
The savage cuts in steel output over the past nine months have partly
rebalanced supply and demand by eliminating overblown inventories
in the supply chain. Moreover, steel consumers, including OEM’s,
building and construction companies and distributors were also carrying
substantial stocks of their goods and raw materials in the boom market
conditions.
There are indications of a pick up in automotive production across the world - fuelled by scrappage schemes and tax incentives. Construction demand appears to be improving in China and some emerging nations. Tax incentives to purchase white goods are also being signalled in several countries. These should lead to inventory rebuilding and higher real consumption of steel. Construction activity is, however, slow to revive at the moment (except in China and a few Asian nations), despite government investment in infrastructure projects. The impact on steel demand from the building segment will take more time to come to fruition, particularly in the industrialised nations.
MEPS foresees blastfurnace iron production in 2009 at 835 million tonnes - a reduction of 91.5 million tonnes compared to 2008. Higher vehicle manufacturing should assist in improving activity at the blastfurnace mills in the second half of this year. A 6.4 percent decrease is forecast for direct reduced iron output in 2009. This smaller decrease compared to steel is due to stronger market conditions prevailing in many of the countries employing this iron making process.
Quarterly crude steel production in the EU-27 member states fell to around 30.5 million tonnes during the first half of this year - a decrease of approximately 43/45 percent. There are indications that mill order intake is now increasing. Some producers are starting up previously closed plants, particularly to produce material for the automotive sector. Steel buyers are starting to reorder because inventories have dropped to very low levels. However, they remain cautious about building up stocks to anywhere near pre crisis levels.
After a difficult start to the year, iron and steel production in non EU Western Europe has started to recover. As a consequence, we have made a small upward revision to our earlier forecast for steel output in 2009 - mainly as a result of improvements in Turkish mill activity.
We have uprated our forecast for CIS crude steel production in 2009 to 93 million tonnes. This represents a decline of 18.6 percent on the previous year’s figure. Many steel mills across the region are selling semi-finished products in export markets because of the favorable currency exchange rates compared to most other countries of the world.
The impact of the global economic crisis has been felt most acutely in the NAFTA region. Weak market conditions have prompted us to downgrade our previous forecast for crude steel production to just below 83 million tonnes. This represents a decrease of one third on the 2008 figure. A similar reduction is predicted for blastfurnace iron production. Steel demand is flat in all the major steel producing nations in the region. However, we believe that the worst is now past and steel output will begin to turn up in the second half of the year.
South American steel production dropped significantly in the first quarter of this year. Since then steady improvements have been made but a pick up in economic conditions across the region has been slow to take off. We now expect an 11 million tonne (23.5 percent), year on year, decline in supply from local mills in 2009.
We predict that African steel output in 2009 will decrease by approximately 10 percent compared to the prior year. Some North African markets are picking up - particularly for residential building. This should lead to a better second half performance.
Iron and steel production in the Middle East is forecast to rise in 2009, against the trend in most other parts of the world. Ironically, construction demand has fallen across most of the region but new capacity has come on stream and output is being ramped up at existing units.
Total Asian iron production is forecast to decline by 2 percent in 2009, year on year. Steel output is expected to be 3 percent lower. A revival in construction in many parts of the region is underway. Government stimulus measures have also assisted in maintaining a reasonable level of demand in these difficult global economic conditions.
30.06.2009
THE MEPS WORLD STEEL PRICE RISES IN JUNE FOR
FIRST TIME IN ELEVEN MONTHS
Canadian transaction values, however, are still falling. The escalation in the strength of the local currency versus the US dollar is making the country more attractive to US mills, although offshore imports remain virtually absent. Domestic producers have reported a couple of weeks of modest improvement in their order position. This is, ostensibly, inventory replenishment which suggests destocking may be near completion. However, the consensus amongst distributors is that market conditions remain very sluggish and the continued automobile closures and shutdowns have damaged any possibility of a summer upturn. A slight pick up is envisaged in the September/October timeframe.
Despite steady growth in imports and domestic output, the price trend for Chinese flat products has turned positive, supported by a strengthening of real demand and traders restocking ahead of further perceived increases.
The recent sharp production cuts in Japan have helped to reduce inventories. Moreover, a small recovery has been noted in demand from car and electronic goods makers, as well as overseas customers. Stocks of strip mill products held by local steelmakers and distributors, as end of April, fell to below the 4 million tonne mark for the first time in two years. Meanwhile, quayside inventories of imported flat products dropped by 13.1 percent in the same time frame. The mills hope to be able to gradually lift output in the Autumn.
Weak consumption continues to dominate the South Korean scene. Following Posco’s extensive price cuts last month, other local suppliers have brought their figures inline with the market leader. Demand is slowly recovering in Taiwan. CSC will lift domestic list prices for July and August by an average of 7 percent compared to June – the first official rise this year. The company has said the increases are due to supply shortfalls as steelmakers have been axing production during the global economic downturn. Chung Hung Steel also announced higher selling values for June contracts with both local and export customers, citing escalating input costs caused by more expensive slab.
Polish strip mill product values are unchanged when denominated in Euros but are slightly higher than a month ago when quoted in the domestic currency because of exchange rate fluctuations. Demand has worsened as the economic crisis cuts deeper and prices are not expected to show any significant growth during 2009. Producers are carrying on with their output curbs.
In the Czech and Slovak markets, although the rate of price decreases has slowed, the outlook remains pessimistic as end-users have very little work on hand. In May, distributors’ stocks plummeted to a level where it seemed they needed to re-order but they have only purchased enough to fill any gaps that might have appeared. Producers have tried very hard to push prices up and, initially, a few buyers agreed to pay a little more. However, the higher figures did not hold. Customers have received offers from Russia, India and China but the quotations are similar to those of more local suppliers.
In Western Europe, end-user consumption remains weak. However, buyers are coming back to the market, albeit only for relatively small quantities to replenish their dwindling stocks. Although EU producers have lifted their latest domestic offers, customers are hesitant to accept the increases. With the US dollar weakening against the euro and sterling, imported material is becoming more competitive. However, many purchasing executives lack the confidence to order significant tonnages on such comparatively long delivery lead times, bearing in mind the woeful state of real consumption.
Quality steel supplied for:
oil & gas, petrochemical & process,construction & shipbuilding industries
