Thursday, January 31, 2008


According to MEPS it is going to be a difficult year for steel users:-

They report:

Although US inventories are down at the distributors, they report that business is not robust. However, margins are holding. Supplyside tightness and ongoing escalating costs for raw materials, energy and freight are driving transaction prices up as producers announce a series of increases - $US30 per ton in January to be followed by $US40 per ton for February shipments. Import volumes are massively reduced and the price of foreign steel is soaring. These conditions are likely to last for some months ahead.

Canadian transaction numbers are advancing. Rising input expenses are creating a strong impetus for steelmakers to boost their prices, overshadowing relatively soft consumption. Imports in the first half of 2008 are expected to continue at a low level as prices remain above domestic values and freight costs increase. The strong local currency is still adversely affecting the country's manufacturing base.

The Chinese Ministry of Finance finally issued new export tax rates on December 26 2007, effective January 1 2008. Domestic market prices have undergone further positive developments over the last month in a climate of good demand and relatively low stock levels. Increasing costs of production continue to drive the mills to push for price rises. Inventories are gradually reducing in Japan as producers limit output to the general market because of poor construction activity. Stocks throughout the supply chain are decreasing. Demand from the auto and electronics sectors is good.

Despite strengthening downstream consumption, South Korean producers kept flat product prices steady but in late January proposed significant hikes. As expected, values are on the rise in Taiwan, where sales are robust and raw material prices and shipping costs are climbing. CSC had already tabled price advances for the first quarter. Triggered by the Chinese ingot export tax rise of 25 percent, the gains were higher than the market expected.

In Poland, ArcelorMittal has pushed through a small increase on strip mill products for February delivery. The tendency for the next couple of months is likely to be upwards as the economy continues to prosper. Prices in the Czech Republic and Slovakia are slightly down, influenced by business in neighbouring countries and the strong local currency. Although economic growth has slowed, it is still good. Steel stocks are low at service centres, consumers and mills. Market players are optimistic about conditions in 2008.

Import offers are now well above those pertaining in Western Europe for the first quarter. This will certainly leave the domestic mills with opportunities to lift prices when period two discussions open. This could be quite soon, as some producers are claiming that January/March is already fully booked.


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