Malaysian steel demand bottoming out
Malaysia's apparent steel demand in 2008 fell by 10.7% year-on-year and is forecast to contract by an additional 25% this year. There was a sharp drop in steel demand of more than 60% in fourth quarter 2008, and this low steel demand continued into the first quarter of this year. The market appears to be bottoming out, with de-stocking likely to continue taking place this year until Q3, says Chow Chong Long, president of the Malaysian Iron & Steel Industry Federation (Misif). Misif projects that demand for finished steel will pick up by 10-15% each quarter this year after prices reached lows in December that continued into first quarter 2009. "We are starting to see a pick-up in demand, and orders (for both domestic and export) are coming in slowly," Chow tells Steel Business Briefing. Since demand will take 2-3 years to reach levels seen in 2007, mills must exercise restraint, SBB is told. They cannot operate at full capacity yet unless there is demand from markets outside Malaysia. Steel demand has been helped by small government construction projects. The large government projects will take a little longer to be implemented, however. The government is also committed to a second stimulus package. Misif estimates that 25% or over $15bn will be spent on construction projects over the next two years. The average price of billet dipped to M$1,900/tonne ($538/t) in December 2008 and remained at that level for January and February 2009. Production levels and sales volumes dropped by an average of 60%, and the industry has only begun seeing a slight a recovery in sales or exports in recent weeks
SE Asian billet prices continue to surge
Billet import prices have risen in Southeast Asia to around $420-430/t cfr levels. Import buying was most active in Vietnam last week, regional trading sources tell Steel Business Briefing. The country has witnessed buoyant growth in its construction and building sectors in recent months. Bookings in Vietnam for Russian material took place at $420-425/t cfr. Higher-priced bookings were also heard for prompt shipments, especially for Asean-origin billet which enjoy a preferential import duty of 5% as compared to 8% for imports from elsewhere. Traders believe that Malaysian-origin billet was recently booked at around $435/t cfr. Some traders in Vietnam tell SBB that there are fewer offers of billet in the market because some mills are holding back offers in anticipation of higher prices. "Just when you think prices cannot go up further, mills ask for higher prices. Demand is there but price is an issue," a trader in Ho Chi Minh says. Offers of Taiwanese-origin billet were prevailing at $425-430/t cfr. Taiwanese trading sources say that the Taiwan mills will be seeking higher export prices of around $425/t fob because scrap prices have risen recently. This is the same export asking price of certain Malaysian mills. Bidding in the Philippines is at $415-420/t cfr and a booking was done there for Russian-origin billet at $420/t cfr. A small volume was concluded in Thailand last week at around the same price level, SBB is told.
Malaysia's apparent steel demand in 2008 fell by 10.7% year-on-year and is forecast to contract by an additional 25% this year. There was a sharp drop in steel demand of more than 60% in fourth quarter 2008, and this low steel demand continued into the first quarter of this year. The market appears to be bottoming out, with de-stocking likely to continue taking place this year until Q3, says Chow Chong Long, president of the Malaysian Iron & Steel Industry Federation (Misif). Misif projects that demand for finished steel will pick up by 10-15% each quarter this year after prices reached lows in December that continued into first quarter 2009. "We are starting to see a pick-up in demand, and orders (for both domestic and export) are coming in slowly," Chow tells Steel Business Briefing. Since demand will take 2-3 years to reach levels seen in 2007, mills must exercise restraint, SBB is told. They cannot operate at full capacity yet unless there is demand from markets outside Malaysia. Steel demand has been helped by small government construction projects. The large government projects will take a little longer to be implemented, however. The government is also committed to a second stimulus package. Misif estimates that 25% or over $15bn will be spent on construction projects over the next two years. The average price of billet dipped to M$1,900/tonne ($538/t) in December 2008 and remained at that level for January and February 2009. Production levels and sales volumes dropped by an average of 60%, and the industry has only begun seeing a slight a recovery in sales or exports in recent weeks
SE Asian billet prices continue to surge
Billet import prices have risen in Southeast Asia to around $420-430/t cfr levels. Import buying was most active in Vietnam last week, regional trading sources tell Steel Business Briefing. The country has witnessed buoyant growth in its construction and building sectors in recent months. Bookings in Vietnam for Russian material took place at $420-425/t cfr. Higher-priced bookings were also heard for prompt shipments, especially for Asean-origin billet which enjoy a preferential import duty of 5% as compared to 8% for imports from elsewhere. Traders believe that Malaysian-origin billet was recently booked at around $435/t cfr. Some traders in Vietnam tell SBB that there are fewer offers of billet in the market because some mills are holding back offers in anticipation of higher prices. "Just when you think prices cannot go up further, mills ask for higher prices. Demand is there but price is an issue," a trader in Ho Chi Minh says. Offers of Taiwanese-origin billet were prevailing at $425-430/t cfr. Taiwanese trading sources say that the Taiwan mills will be seeking higher export prices of around $425/t fob because scrap prices have risen recently. This is the same export asking price of certain Malaysian mills. Bidding in the Philippines is at $415-420/t cfr and a booking was done there for Russian-origin billet at $420/t cfr. A small volume was concluded in Thailand last week at around the same price level, SBB is told.
Malaysian Ringgit Exchange Rate