Inventories at US service centres and OEMs are up from the very low levels of a month ago. The proposed January price rises have spawned a mild buying frenzy for December delivery. The market is described as "moderately strong" due to tightened supply, with little or no offshore offers. The October transaction price increases are now fully implemented. However, distributors report that underlying demand is only steady. There is a great deal of anxiety over which way the economy is heading.
In Canada, producers have announced a $C40 per tonne increase for January business. A portion of the rise has been accepted on some products but service centres are worried that their customers will not be able to absorb the higher prices. Current demand is weak with substantial automotive production cuts planned for period one. Inventory levels have been falling. Moreover, offshore imports are not a factor. The strong Canadian dollar is having a detrimental impact on the country's manufacturing base.
Chinese prices have made some very positive developments over the last month in a climate of strong demand and low stock levels. As expected, increases in input costs have encouraged producers to push for higher prices. Meanwhile, the strong Yuan, together with recent changes to the export tax system, continues to dampen overseas business.
In Japan, demand from the major domestic manufacturing sectors is still firm and steel exports are also growing. Producers are talking up price rises for April which they feel will be necessary to compensate for higher raw material costs. Total domestic stocks of coil held by the mills and service centres, as end October, moved up by just 0.8 percent compared to September. Quayside inventories of imported flat products dropped by 1.3 percent in the same time frame - the first fall in three months.
Downstream demand is strengthening in South Korea. Automotive, shipbuilding and machine manufacturing are all expected to perform well in 2008. In Taiwan, CSC has announced its domestic list prices for the first quarter of next year. The company has proposed increases for most flat product categories. Demand is strong and raw material prices and shipping costs are rising.
The Polish economy continues to prosper. Mittal Steel Poland will roll over December prices into January 2008. In the Czech Republic and Slovakia, mills and customers continue to keep stocks under control. The market is not troubled by large quantities of imports. We have noted some price deterioration this month, partly because a number of steel contracts are made in Euros and both Czech and Slovak currencies are very strong at present. This is also adversely affecting exporters.
Following ArcelorMittals’ price announcement, it now seems unlikely that any strip mill product increases will be implemented in Western Europe in the first trimester 2008. The company intends to defer the rise, which will reflect an escalation in raw material costs, until period two. Inventories in most countries are still above normal levels and third country imports, ordered some time ago, continue to arrive.