MEPS are reporting that prices continue to fall despite the steel producers strong stance.
Transaction prices continue to head downwards In the US as scrap costs are dropping rapidly. Mill order books are very weak because customers are depleting their inventories. Financing of stocks has become a real issue. Buyers are holding back from purchasing, expecting that the negative price trend will continue. Foreign suppliers are now more active with the strengthening of the US dollar but, so far, the quotations for arrival January are not attractive. Export opportunities are drying up as world markets adjust to the financial crisis.
Canadian mills have curtailed production at some of their facilities and further cuts may be scheduled for later in the quarter. They tried to hold prices at the September figures but eventually had to concede discounts. We expect values to drop rapidly during the final trimester. Customers have no interest in purchasing offshore material even though offers are becoming more competitive. The current credit crunch is putting undue strain on manufacturers and on consumer spending activity. This is likely to lead to further erosion of steel consumption over the next few months.
Chinese values have posted huge losses since our September report, amidst weak demand, excess stocks and negative market sentiment due to the slump in the world economy. The global crisis is badly affecting export business and thus diverting more material onto the domestic market. Falling raw material prices have enabled steel buyers to exert even greater pressure to gain discounts. Major steel companies have announced significant cuts in production to try to stabilise the situation.....
Read the full story at MEPS
Continuing bad news from manufacturing, with production cuts, layoffs and short time working does little to indicate there will be any increase in demand and therefore no respite for the steelmakers. Continuing financial uncertainty is undermining confidence and restricting credit. I think we are likely to see a few casualties in the steel industry before the market picks up again.