Record hike for U.S. steel prices

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

29 Apr 2008

US transaction prices are going through the roof with gains over the last four weeks as high as $US145 per tonne for some products and more substantial hikes planned by the mills for June deliveries. Domestic values have now caught up with average world prices. Although real demand is no more than satisfactory as the economy weakens, supply is being allocated by the local mills. The availability of imports is virtually nil, due to the weak US dollar, high ocean freight rates and soaring prices in other regions. OEM's complain that expected delivery times are not being met. Inventories at the service centres are described as "low to medium". They are unlikely to be rebuilt in the short term as buyers are unwilling to speculate when steel is so expensive.
In Canada, domestic order intake is strong. Producers need to offset the large increases in raw materials, such as iron ore and scrap. Consequently transaction values continue to advance, despite alarm amongst customers. Current imports and permits for the future remain low. Whilst local demand is reasonable but not overly strong, reduced foreign supply has helped keep the market in balance. Distributors' inventories dropped 10 percent in February to the lowest volume in more than a year. Stocks are depleted enough to require the service centres to keep purchasing, although they hesitate to do so with prices so high. The mills have tabled more increases for June.
International values are rising more swiftly than those in China at present, spurring on producers to look again at export opportunities. However, local demand remains solid. Output cuts at steel mills around Beijing, ahead of this Summer's Olympic Games, are expected to further strengthen values. In Japan, steelmakers have reduced shipments to the distribution sector in order to service the requirements of contract customers at home and abroad. Service centres are looking for alternative sources overseas. Further, upward price adjustments are expected in the third trimester. Inventories of strip mill products held by the mills and distributors went down by 2.3 percent in February compared to the previous month. Imports declined by 14.4 percent in the same time frame. Export business continues to expand. In South Korea, as expected, Posco has compensated for huge raw material cost rises by ramping up steel prices by an average of over 20 percent. Taiwan's Chung Hung Steel announced sharp increases on all flat products for April business. CSC is already warning domestic customers of further price hikes to come in period three.
The upward price trend continues in the three East European countries under review. Monthly pricing is now commonplace amongst domestic mills. There is concern that the strength of local currencies against the Euro will have a negative impact on exports of both steel and manufactured goods. In Western Europe, despite relatively muted consumption, steel prices continue to escalate, sustained by supply-side restrictions. There are virtually no workable offers from third country sources. Moreover, many market players believe that the EU mills are maintaining low output in order to drive values up - using higher input costs as justification. The producers are talking of another round of price advances for period three.

Source: Meps