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Global Steel Price Declines Again In April

Canadian service centres report weak demand for flat products and continuously falling prices. They do not anticipate any improvement in the short term and they are only purchasing for orders already on their books. End-users are pessimistic. Domestic mills are keen to conclude deals and their delivery lead times are very short. However, pressure from offshore suppliers continues to push local transaction values down.

Chinese demand is cooling even though the government is providing further economic stimulus. Growth in GDP slowed to a six year low in the first quarter 2015. The real estate market is suffering badly, leading to declining sales of steel to the construction sector. Steel output fell in the same time frame. Flat product prices have continued their downward trend, due to depressed demand, ever declining raw material costs and overcapacity.

In Japan, general economic activity is improving, albeit slowly and unevenly. However, steel demand continues to contract, especially in the auto and construction sectors. Orders on the mills dropped in February, year-on-year – the seventh consecutive monthly fall. Import volumes also shrank in February, year-on-year, and were 16 percent lower than those in January.

The South Korean economy remains lethargic and is slow to show any recovery. Steel demand is soft and there is oversupply from both local capacity and imports. Overseas arrivals continue to climb. In March, they were up another 4 percent, year-on-year, and an enormous 46 percent from the previous month. The source of most of this tonnage was China.

Major Taiwanese producer, CSC, has announced a domestic list price cut of 7.4 percent, on average, for June shipments, compared with the figures published for the April/May period. Weak demand in both domestic and overseas markets was cited as the main reason for the decrease. The reduction is the steepest this year. In the home marketplace, transaction values have continued to fall, amidst stiff competition from cheap imports.

In Poland, second quarter strip mill product prices are slightly higher than in the first trimester, when measured in euros, but exchange rate fluctuations mean they are lower in zloty terms. Buyers do not believe that significant increases are possible in the present climate. Consumption is reasonable but imports continue to take up a large share of the market.

Although business levels normally improve at this time of year in the Czech/Slovak markets, participants report that this has not been the case, so far. The growth in Czech industrial production slowed markedly in January, compared with the previous month, but continued improvement in the economy is forecast for the remainder of 2015. Transaction values have deteriorated slightly since our last report.

Activity in the West European market for flat products slowed a little, ahead of the Easter holidays in early April. However, many domestic mills have delivery lead times extending into the end of June, or even July, thanks to improved export business on the back of a weak euro. Second quarter prices in continental Europe are generally flat at similar levels to those in the first trimester. In contrast, the UK market continues to undergo price erosion, as mainland European suppliers take advantage of currency movements which have enabled them to offer more cheaply.

Source: MEPS

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