Global steel market remains sluggish on weak demand despite weather turns warmer. Currently, global steel export quotations fall and transactions remain plain. However, global steel export quotations are expected to pick up later on higher raw material prices after low-priced products sold out. At present, some steel mills have already raised their export quotations for May and June deliveries.
Global steel export quotations fall after perching high. Global steel export market showed the downward trend since March and global steel prices fell correspondingly after perching high. Since December 2010, end-users began to build up inventory and the active transactions at the market pushed global steel export prices up continuously.
Up to mid March 2011, HR coil export prices worldwide averaged at USD 771 per tonne FOB, up 25% or USD 152 per tonne compared with December 2010. However, after that, purchasing activities began to slow down as inventories of raw materials increased in the downstream, which resulted in a big drop in trading volume at the global steel market.
Meanwhile, the intensified political turmoil in Middle East and North Africa coupled with the earthquake in Japan imposed a negative impact on steel demand worldwide. Transactions remained stagnant in steel market of Middle East and North Africa since the unrest took place. Turkish Iron and Steel Producers Association sees it as possible for Turkish exports to shrink by 10% in 2011.
Mr Veysel Yayan head of Turkish Iron & Steel Producers Association said that the devastating earthquake which hit Japan on March 11th 2011 also severely damaged global supply chain of manufacturing sectors, especially auto production sector. Japanese made auto output shrank significantly in local Japan market as well as in foreign countries like US, China and India and were expected to continue in the next two or three months. Besides, the current global steel export quotations remain high above local market prices, which is unfavorable to global steel exports.
In South Korea, for instance, market prices of rebar produced in China and Japan now hit KRW 740,000 to KRW 760,000 per tonne and KRW 780,000 to KRW 790,000 per tonne respectively, that is KRW 50,000 to KRW 70,000 lower than import prices. Thus, South Korean importers show no interest in rebar imports. Global steel export prices expected to pick up. Despite sluggish demand, global steel export quotations didn’t show a massive decrease on high production costs.
Up to April 28th 2011, global HR coil export prices averaged at USD 731 per tonne FOB, a drop of 5.2% or USD 40 per tonne as against mid March. Global steel mills will face higher production costs in response to the continuous rise of steel making raw material prices in the second quarter. It is predicted that global steel export quotations, nearly approaching production cost levels of steel mills, will have little room to fall further.
It is learned that Japanese and South Korean steel mills have agreed to keep HR coil prices at about USD 800 per tonne FOB for May delivery, a slight rise compared with the quotation for April. There were rumors that prices would continue to rise in June. In addition, end users are expected to re-join purchasing activities and accept higher quotations as their inventories fall and low prices resources sold out.
( Source: www.steelguru.com )