The reduction in the MEPS Global Steel Price is the result of fallout from the collapse in the cost of
iron ore as
the mining companies made huge investments in new capacity. For this
reason the substantial steel selling price reductions have not been a
major disaster for the world’s steel manufacturers. A significant amount
of the erosion in mill revenue has been offset by a substantial
decrease in the cost of steelmaking raw materials.
In
the United States, GDP growth has, once again been revised upwards. It
now stands at minus 0.2 percent, for the first quarter of 2015. The
Purchasing Manager’s Index (PMI for manufacturing) increased last month
to 52.8 – a positive sign. The majority of buyers continue to purchase
only for their immediate requirements. The prospects of a substantial
steel price revival are poor. The threat of cheap overseas imports is
ever present.
The Canadian steel market is still moving at a slow pace. Delivery
lead times
from the mills are shortening. The economy is weak. Substantial
quantities of imports have already arrived at the ports. Steel
inventories at the OEM’s are in decline. Service centre stocks are
starting to return to normal levels.
Chinese
finished steel output
increased in May by approximately 2 percentage points, month-on-month.
The domestic market is unable to utilise such an increase in tonnage.
Exports have expanded by over 30 percent, year-on-year, in the first
five months of 2015 but they are insufficient to take up the excess
domestic supply. Some steel mills are reportedly making a loss of 300
yuan on each tonne of steel produced.
The
South Korean Trade Commission recently responded to complaints about
foreign imports of structural sections into the country by imposing
anti-dumping duties on material from a range of suppliers. Seven mills
were exempt when they agreed to lift selling values. Steel imports are
on a decreasing path. In April, a year-on-year, reduction was reported,
whilst, in May, the decrease was 11 percent.
The
Taiwanese steel market has been influenced by price movements in China.
Reinforcing bar list prices have been reduced. We detected very few
positive vibes from the market this month.
Steel
demand in Western Europe is holding up reasonably well. The mills are
experiencing strong competition from imports. The European Commission
has instigated an anti-dumping investigation against imports of cold
rolled coil from China and Russia. Selling figures are under negative
pressure in most member states.
