By Nick Gilbert
According to MEPS, steel prices have reduced significantly in the international markets. In view of weak economic conditions, extensive imports and falling prices of raw material across the globe have impacted the prices of flat products in the US.
The demand for steel has declined significantly, but this scenario has not categorically affected the domestic economy, which is performing satisfactorily till date. While end-user activity has not changed much, service centres are delivering costly inventories to promote affordable steel in the upcoming days. As a result, competitiveness can be seen in the resale values of such products.
In fact, transaction values in Canada have reduced, which is an indication of the latest decline in scrap costs. Reduced demand and falling input prices may sway the mini-mills to provide huge discounts during the summer time. On the other hand, customers continue to be concerned over spiraling prices.
Several major producers in China have decided to reduce their ex-mill figures for the July month and this in turn has affected the weak domestic market. Sales volumes to international clients have come down significantly and the related costs have also reduced. Price recovery is likely to happen by July or August.
In Japan, the completion of a major business deal and the weaker yen in March resulted in high export quantities during the May month. Since that period, the currency was revived again but this negatively impacted the competitiveness of the domestic mills in the overseas markets.
In South Korea, the market is closing down in advance of the holiday season in summer, and end-users are hesitating to place orders during this time. As a result, prices of flat products at the service centres continue to rise. While auto output is active, domestic demand from shipbuilding and construction remains weak.
Consequently, to balance supply and demand, the mills may elect to reduce their capacity utilisation rates. Third country import offers appear to be limited because the euro is losing ground against the US dollar.