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1
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2
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- Following recent increases in the US market, there has been a further
wave of price increase announcements from steel producers. Prices have
risen by up to US$180/.ton over the past month, and the total increase
over the past three months has been as much as US$380/ton.
- Market fundamentals have tightened due to reduced availability from some
domestic mills as a result of unplanned outages. At the same time, high
freight rates and a weakening US dollar have made the US market
unattractive for imports.
- With imports remaining low, the production disruptions have meant that
mills are struggling to satisfy demand, and so prices have risen rapidly
as a result.
- Worldwide prices for cold-rolled and hot-dipped galvanized material have
risen in China as distributors increase orders in time for the end of
the Spring Festival break.
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3
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- Since the rise in US prices has not been accompanied by a large increase
in stocks, prices will be able to rise further without coming under
pressure from service center destocking.
- Asian importers expect Chinese mills to announce further export price increases
for April shipment in the next few days. Due to ongoing shortages of
slab and HR coil in particular, many buyers fear that offers will rise
significantly. In Europe also, following the large price rises announced
by some mills for April, prices may increase further over the second
quarter.
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4
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- Looking ahead, the good news for mills is that there is an increasing
chance that the market could be about to endure a fairly prolonged
period of high prices. The reason: this current price spike, unlike
those seen in 2004 and late 2005/early 2006, has not been accompanied by
a huge increase in stocks.
- In fact, the rapid rise in prices, along with the rather fragile state
of the US economy, has meant that service centers have not wanted to
build inventories (even if they could have).
- For the foreseeable future, this means that we will not see prices
coming under pressure, at least not from service center destocking,
which has been the number one factor behind the last two significant
downward trends in prices.
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5
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6
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7
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8
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9
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10
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11
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12
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13
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- Factory bundles (scrap) rocket $80 per ton Higher Scrap Prices Causing More
Scrap Exports
- Spurred by strong domestic demand for steel scrap and the absence of
cheaper alternative steelmaking materials, prices paid factory bundles
rose by a record $80 a long ton in sales that closed late Friday,
Several surprised brokers and mill buyers had predicted prices could be
up by anywhere from $40 a ton to as much as $80 a ton.
- Ferrous scrap exports topped 16.4 million tons in 2007, a 32-percent
jump from the previous year the past decade. Overseas demand continues at a
steady pace on the West and East coasts, traders said. Several
scrap traders have pointed to the U.S. dollar's weakness and the strength
of steelmaking overseas as the main explanations for the spike in
exports.
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14
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15
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- Iron ore prices up 65% for Japanese and South Korean steel mills
- Japanese and South Korean steel mills have agreed to a 65% increase in
iron ore prices from Brazil in the industry's first major deal for this
year, which will set a benchmark for prices at a level painful for steel makers.
- World Coal/Coke Prices to Raise
- Australian coal mine issues are getting serious. One of the
biggest coal mines declared force majeure It is totally under water
and now trying to pump out the water but even after that they need to
fix all mining machinery which has been under water for a month. It could take another 3-4 weeks
at least. This could be serious bottle neck of all blast furnace mills
production in Asia. Japanese
mills said that they will have to buy triple priced coal at spot prices
from USA mines, it could reduce production of Asian blast furnace mills
and might make steel market tighter.
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16
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17
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- SeverStahl Blast Furnace Trouble:
- PITTSBURGH -- A breakout at the "B" blast furnace at Severstal
North America Inc., Dearborn, Mich., could idle the smaller of the
steelmaker's furnaces for "a substantial period," a company
executive said. “SNA Dearborn will have to totally demolish the
" B " Furnace due to recent accident. This will take approx.
2500s/t per day out of their production. S-Corr can't make up this short
fall, and it doesn't appear slabs are readily available. So market
should tighten more.”
- India is shuting off exports due to domestic demand
- China is shutting old steel capacity total capacity down over 15%
- China's crude steel output is estimated at 490 million metric tons this
year. The regional governments and various steelmakers now also have
agreed to shut down 78.7 million metric tons of outdated iron making
smelters.
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Notes
