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News Release from: MEPS (International)
Edited by the Manufacturingtalk Editorial
Team on 14 August 2007
Oversupply looms on world steel markets
Low prices on steels is tending to slow down exports markets while Asian stainless steel prices are also forecast to continue falling during August 2007, but may rise in 2008.
* Average world steel prices - the recent introduction of the levy on certain steel exports from China is now limiting supplies from the country However, arrivals into the EU in June were significantly up as traders anticipated the action
This article was originally published on Manufacturingtalk on 9 Oct 2006 at 8.00am (UK)
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Low prices in North America were already keeping Far East exports at bay but demand has been poor.
In China, the loss of exports and new capacity has created an oversupply in a number of product categories.
* Flat products - in the flat products category, we foresee the world average flat products price drifting lower over the next few months.
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Inventories are likely to remain excessive up to the start of the final quarter in all regions.
In the US a price recovery is anticipated as supply and demand rebalances.
EU figures should stabilise in the near term but could decrease further as the inventory depletion phase continues.
Oversupply is likely to continue in Asia for the remainder of the year - keeping prices low.
A price recovery is forecast in the EU in 2008 when the inventory reduction has been completed.
North American values are expected to continue their recovery.
A modest rise is anticipated in Asia as the mills try to recoup higher input costs.
* Long products - in the long products sector, we predict reasonably stable pricing conditions over the next few months in all regions.
However, in the final quarter and into the early part of 2008, we forecast further declines in North America and EU for seasonal reasons.
Asian values should pick up marginally as construction revives.
Price increases are forecast for all regions in the early part of 2008 - pushing up the world figure slowly.
Input costs are likely to increase and modest demand improvements are anticipated.
* Asian average stainless steel prices - stainless selling values are forecast to slide again in August, 2007.
Mills will remain obliged to concede the nickel decrease immediately to their customers in order to encourage orders from local buyers.
Exports are still sluggish and expected to continue to be slow in the short term as the price in the west drops significantly due to alloy surcharge reductions.
Over capacity in the Chinese market is anticipated to intensify, putting further pressure on Asian selling figures.
Planned production cuts are not likely to be enough to ease the dramatic stainless steel price falls predicted until the end of this year.
Nickel prices moved lower in July as they fell further into their deep descent.
The July monthly average is set to be around US$8,500/tonne below June's figure.
Nickel values are forecast to continue falling and are anticipated to drop below the psychological US$30,000/tonne mark for the August average as stocks on the LME continue to rise.
There is still the possibility for another severe drop in the cost of nickel.
Stability should return to the market later this year as production cuts from stainless steel producers over the Summer months bring supply and demand nearer into equilibrium.
New nickel capacity due on stream later this year and in 2008 is expected to prevent values rising dramatically before the end of the forecast period.
The continued downfall in nickel prices should result in stainless transaction values, for all products, recording significant declines into the fourth quarter of this year.
By the beginning of 2008, cold rolled coil type 304 prices are anticipated to slip below US$3,800/tonne with grade 316 dropping to just near US$6,200/tonne.
The reduction in nickel prices is forecast to ease after the Summer, which should help to stabilise the stainless market by early 2008.
* Source - MEPS Steel Prices Online.
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