Weak Chinese export prices create uncertainty - WSR
Falling Chinese export prices are influencing market sentiment, but they have yet to fall sufficiently to make a significant direct impact on global prices. Indirectly though, they are causing uncertainty, as potential buyers are delaying purchases, as they wait to see if export prices will decline further. However, as China is on holiday for a week or so, it will be some days before this situation clarifies. At the same time, with much restocking having been completed, some observers are fearing another price downturn, as global demand is still questionable. In such a "W" scenario though, this second decline is unlikely to be as deep as the first. Prime boron-added wire rod was being offered in recent weeks at $525-535/t cfr Southeast Asia, down from $540/t cfr previously. This contrasts with buyers bidding $505-510/t cfr. Billet from the CIS and elsewhere was also being offered last week at $495-510/t cfr East Asia. Trading sources tell SBB that with the narrowing of the rod-billet price differential, re-rollers prefer to import wire rod rather than roll their own billet. On the HRC front, Chinese offers into both northern and southern Europe were down to about €380/t ($552/t) cfr or less in some cases . equivalent to around $500/t fob China, or less. Offers to Korea were at a similar fob level. Rumours of much lower fob prices have been heard, but not confirmed. Meanwhile, scrap prices are typically weaker reflecting softer rebar and rod prices. As there are currently few signs of an immediate Middle East revival in demand, Turkish producers have been slow to re-enter the scrap market. Moreover, there are calls for excess capacity in the country to be closed.
Imports threaten stability of Russian domestic rebar prices
The Russian domestic market for long products is facing new challenges after a fairly stable summer, a major producer tells Steel Business Briefing. Weak international markets are threatening stable prices, which, should they remain unchanged, will attract more imports from neighbours, a source says. A thoughtful approach to stocking policies and thorough understanding of the diminished needs of customers led to a supply-demand balance during the summer. However, with post-Ramadan buying activity failing to show up so far and the traditional seasonal lull ahead of them, Russian producers are not optimistic. "Byelorussia, Moldova and Ukraine are closer to the regions where there is most of the demand," a major producer says. If prices don't fall this month, there are guaranteed to be more imports, he says. "Ukrainian imports have doubled in the last month," he notes. "We even attracted imports from Spain," another source adds. Sources close to Moldova Steel Works (MMZ) tell SBB that probably half of its wire rod allocations for this month will be going to Russia. The mill is said to be working at "good capacity utilisation rate, of at least 70%." Ukrainian producers' Makeyevka and Kriviy Rih decisions to cut production have been received well, another source says. From the June levels of around 13,800 roubles/tonne (€319/t) ex-warehouse (excluding 18% VAT) for rebar, prices today are 18,500-18,700 (€423 - €428/t) for regular grade, and up to €453/t for higher grades. But the volume of demand is expected to contract again, with both domestic and export markets' dynamics demonstrating that new waves of production cuts may be on the way.
Over-production threatens price weakness, executives say
Recovery for the European and global steel industry will be slow but steady over the end of this year and in 2010, industry executives comment to Steel Business Briefing. Stocks in both flat and long products all over the world are now lower and the industry is not going back to the worst levels of the recession, they believe. "There is a very delicate balance between demand and supply at the moment, but as soon as demand improves a little mills tend to increase production which causes again over-capacity and price weakening," one executive comments. Chinese prices are weakening and demand at the moment is low, but it has been like that for the past months and yet the general situation of prices, of demand and supply has improved from the worst levels of the past, they say. The European steel industry has proved to be resilient and strong in absorbing the crisis. When the price of hot rolled coils collapsed to €300/tonne mills were able to withstand this enormous price decreases and resulting production cuts. Despite the losses, companies still have a good financial position, one source says. For the next months there will be a gradual recovery characterized by oscillating prices . losing and gaining €20-30/tone. while demand will be unstable but not absent, executives agree.
Falling Chinese export prices are influencing market sentiment, but they have yet to fall sufficiently to make a significant direct impact on global prices. Indirectly though, they are causing uncertainty, as potential buyers are delaying purchases, as they wait to see if export prices will decline further. However, as China is on holiday for a week or so, it will be some days before this situation clarifies. At the same time, with much restocking having been completed, some observers are fearing another price downturn, as global demand is still questionable. In such a "W" scenario though, this second decline is unlikely to be as deep as the first. Prime boron-added wire rod was being offered in recent weeks at $525-535/t cfr Southeast Asia, down from $540/t cfr previously. This contrasts with buyers bidding $505-510/t cfr. Billet from the CIS and elsewhere was also being offered last week at $495-510/t cfr East Asia. Trading sources tell SBB that with the narrowing of the rod-billet price differential, re-rollers prefer to import wire rod rather than roll their own billet. On the HRC front, Chinese offers into both northern and southern Europe were down to about €380/t ($552/t) cfr or less in some cases . equivalent to around $500/t fob China, or less. Offers to Korea were at a similar fob level. Rumours of much lower fob prices have been heard, but not confirmed. Meanwhile, scrap prices are typically weaker reflecting softer rebar and rod prices. As there are currently few signs of an immediate Middle East revival in demand, Turkish producers have been slow to re-enter the scrap market. Moreover, there are calls for excess capacity in the country to be closed.
Imports threaten stability of Russian domestic rebar prices
The Russian domestic market for long products is facing new challenges after a fairly stable summer, a major producer tells Steel Business Briefing. Weak international markets are threatening stable prices, which, should they remain unchanged, will attract more imports from neighbours, a source says. A thoughtful approach to stocking policies and thorough understanding of the diminished needs of customers led to a supply-demand balance during the summer. However, with post-Ramadan buying activity failing to show up so far and the traditional seasonal lull ahead of them, Russian producers are not optimistic. "Byelorussia, Moldova and Ukraine are closer to the regions where there is most of the demand," a major producer says. If prices don't fall this month, there are guaranteed to be more imports, he says. "Ukrainian imports have doubled in the last month," he notes. "We even attracted imports from Spain," another source adds. Sources close to Moldova Steel Works (MMZ) tell SBB that probably half of its wire rod allocations for this month will be going to Russia. The mill is said to be working at "good capacity utilisation rate, of at least 70%." Ukrainian producers' Makeyevka and Kriviy Rih decisions to cut production have been received well, another source says. From the June levels of around 13,800 roubles/tonne (€319/t) ex-warehouse (excluding 18% VAT) for rebar, prices today are 18,500-18,700 (€423 - €428/t) for regular grade, and up to €453/t for higher grades. But the volume of demand is expected to contract again, with both domestic and export markets' dynamics demonstrating that new waves of production cuts may be on the way.
Over-production threatens price weakness, executives say
Recovery for the European and global steel industry will be slow but steady over the end of this year and in 2010, industry executives comment to Steel Business Briefing. Stocks in both flat and long products all over the world are now lower and the industry is not going back to the worst levels of the recession, they believe. "There is a very delicate balance between demand and supply at the moment, but as soon as demand improves a little mills tend to increase production which causes again over-capacity and price weakening," one executive comments. Chinese prices are weakening and demand at the moment is low, but it has been like that for the past months and yet the general situation of prices, of demand and supply has improved from the worst levels of the past, they say. The European steel industry has proved to be resilient and strong in absorbing the crisis. When the price of hot rolled coils collapsed to €300/tonne mills were able to withstand this enormous price decreases and resulting production cuts. Despite the losses, companies still have a good financial position, one source says. For the next months there will be a gradual recovery characterized by oscillating prices . losing and gaining €20-30/tone. while demand will be unstable but not absent, executives agree.
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