Service centre inventories continue to come down in the US but the rate of decline has slowed and they remain above the desired level. Only a proportion of the recently announced flat products transaction price hikes have worked their way into the market place. Real consumption has failed to recover. Import competition continues to be low, due to the weak dollar and good demand elsewhere in the world.
Several factors, including improving levels of demand, higher prices from importers and rising scrap costs have enabled the Canadian mills to lift transaction values once again. Service centre inventories are reducing quite quickly and only in the Ontario region are distributors reporting slower demand from the auto and manufacturing sectors. Import activity is unlikely to resume to any great extent in the near future.
Chinese suppliers are raising their export offers following the cuts in or abolition of the export rebate. Sales are already quite brisk from auto, home appliance, shipbuilding and machinery manufacturers ahead of what is traditionally the peak season. On the supply side, several domestic mills have announced planned maintenance schedules recently, which should help to keep supply and demand nearer in balance.
Demand from the Japanese manufacturing sector remains buoyant and overseas consumption is also strong. Total domestic inventories of strip mill products held by steelmakers and service centres, at end February, dropped by 2.4 percent - the first decrease in three months. They are now below the 4 million tonnes level which is considered appropriate. Quayside stocks lost 4.5 percent in the same timeframe.
South Korean sales remain dull and there is no shortage of supply. Inventory depletion in the distribution sector is still not in its final stages. A number of flat product prices have continued to escalate in Taiwan. However, this buoyancy may prove to be short lived. Export business is suffering as Chinese mills are gaining a large proportion of orders because they have a competitive price advantage. Meanwhile, in the home market, demand is solid from shipbuilders, home appliance makers and construction.
The Polish economic situation is progressing well, creating excellent sales opportunities for the steel mills. In the Czech and Slovak markets, demand for flat products is extremely robust as industrial output continues to grow, partly due to very high levels of inward investment. In addition, the neighbouring economies of Germany and Austria are healthy. The price tendency is expected to be positive for some time. There is virtually no import pressure.
The majority of period two business has now been settled in Western Europe at higher prices. The mills’ initiative was made easier by a decline in the number of competitively price third country offers. Nevertheless, large quantities of material, ordered at the end of 2006, continue to arrive, particularly at the Southern ports. Domestic producers are already talking about further price rises in the third trimester. 26.04.2007