In the US, underlying demand from the manufacturing and building industries is weak. Customers started to hold back from placing orders in August, expecting transaction prices to erode. Certainly, some decreases were noted during that month and the majority of steelmakers rescinded the rises announced earlier for September deliveries. More recently, as scrap costs have dropped, steel transaction values have fallen quite rapidly. Meanwhile, there is little competition from imports whilst domestic mills are benefiting from a rise in export business.
Canadian transaction values fell during August and again in early September. Buyers are being very cautious and it is likely that this slowdown in demand will cause further price erosion through the rest of this month and into October. Scrap costs are also down and expected to drop even more. Domestic mill order books are weak. Sales are sluggish due to extended automotive shutdowns and a declining manufacturing base. For now, there are no signs of growing import volumes and the material available is very similarly priced to the local product.
In China, the price trend turned quite negative over the summer. Steelmakers have started to cut production to try to stem the fall. Overall, market sentiment has weakened as customers worry about future growth prospects. Steel orders from manufacturing and exports continue to be high in Japan. However, dealers’ shipments remain slow due to poor building demand. Nevertheless, inventories of strip mill products held by domestic mills and distributors, at end July, moved down by 0.5 per cent, compared to June. Quayside stocks of imported flat products fell by 9.9 per cent in the same time frame. Domestic supply is expected to tighten towards the end of the year when Nippon Steel will start to build stocks ahead of the blast furnace reline at its Oita works.
South Korea’s Posco has said there are no plans to change prices for the final quarter 2008. In Taiwan, CSC has released its domestic price list for period four. Inline with market expectations, the company raised values by an average of $NT1170 per tonne. Meanwhile, the market has weakened over the summer and our current figures are below those reported in July. However, supply is expected to remain restricted in the final trimester as maintenance will be carried out on blast furnaces in China, Japan and South Korea during that period.
Although producers gained some small price advances for third quarter business in Poland, strip mill product sales fell during August due to bloated inventories. Demand has also been slow in early September. The strong zloty is starting to hurt the Polish export sector. In the Czech/Slovak markets, manufacturers are coping so far with the problems of strong currencies, high energy prices and escalating raw material costs. Steel supply remains tight with stocks at minimum levels.
In Western Europe, there has been very little movement in strip mill prices since July. However, demand over the holiday period was slower than normal for that time of year because of the poor economic climate. Most companies have sufficient inventories for the near-term and are in no rush to conclude new business. The mills are likely to reduce capacity rather than chase orders for the fourth quarter by lowering prices. So far, there is no evidence of severe downward pressure from third country imports….MEPS