Between the summer of 2014 and April 2015, hot rolled coil selling figures, in the US, lost a third of their value, according to MEPS. Mills have gradually pushed through small increases in transaction values since that point. Large volumes of imports and subdued demand have restricted price advances. In fact, some negative pressure has begun to creep back into the market, this month, due to declines in scrap costs and subdued purchasing activity during the holiday period. Mill delivery lead times remain short. Recent filings of trade cases are likely to make buyers more cautious when purchasing third country material. However, a strong US dollar could keep imports elevated in the short term. Consequently, prices could fall further in the fourth quarter, despite mill efforts to raise them.
Selling figures, in Canada, followed a similar downward trend to those recorded in the US. However, strip mill transaction values have failed to recover since bottoming out in the second quarter. The depreciation of the Canadian dollar could provide some upward price pressure in the short term.
In China, steel values have declined significantly over the past twelve months. Falling costs of iron ore and weakening demand were the main drivers behind the reductions in transaction figures. Domestic mills increased export volumes in a bid to boost crude steel production utilisation rates. However, this has led to numerous trade cases being filed by countries across the world. Nevertheless, a recent price revival has been recorded, in August, for most product forms. A devaluation of the renminbi is expected to stimulate overseas sales. This is unlikely to be sufficient to prevent local prices declining in the short term as sales to Chinese customers are expected to slow in the coming months.
Prices in Japan have dropped since August 2014 for all products researched. Domestic demand has reduced following the change to the country’s consumption tax, in April last year. Robust export volumes, of late, have enabled local mills to keep flat products’ transaction values stable since the second quarter of 2015. Weak market conditions are expected to continue in the near term with the potential for price cuts over the next few months.
In South Korea, steel selling figures have been on a downward path since May 2014. There appears to be very few positive signals in the flat products domestic and export markets, at present. Consequently, we expect prices to fall further in the short term.
Significant year-on-year decreases have been recorded in Taiwanese transaction values, in August. Domestic demand is poor and there is increased competition in overseas markets. This is likely to remain the case for the remainder of 2015. Further price deterioration cannot be ruled out, despite selling figures, for hot and cold rolled coil, now being at their lowest point since the middle of 2002.
Flat products’ transaction values in western European countries have declined moderately since August last year. Falling raw material costs and large volumes of imports continue to exert negative pressure on an oversupplied market. The economic climate is improving, however, and sales to local customers are slowly picking up. Nevertheless, we expect domestic selling values to soften during the remainder of this year due to the competitive market environment.
Zhejiang Yaang Pipe Industry Co., Limited (www.yaang.com)