Mr Norm Streu chief operating officer of LMS Reinforcing Steel Group gave his view on the global steel scenario of 2011.
Mr Steu said that in relative terms, 2011 has seen relative stability in steel pricing. After a dramatic run up in late 2010, steel prices have remained within a 15% spread so far in 2011.
He said “Given the wild price swings of recent years, this has been a welcome respite. Our assessment is that the recent relative calm arises from a balancing of positive and negative global drivers. As we move into the third quarter of 2011, we believe these factors will begin to sway towards the positive and towards initially modest, but real upward pressure on pricing.”
He said “Our longer term outlook calls for continued volatility, but an upward trend. There are a variety of factors that have kept steel prices in relative balance, so far in 2011. China’s insatiable appetite for steel continues, but the pace of the growth of that demand has slowed considerably. Given the huge growth numbers of recent years, a slowdown in the percentage increases is not a surprise. However, the relative softening of demand in China is being offset by the steady growth in other parts of the world, particularly Brazil and India.”
He added “China has also recently raised the cost of its electrical power, which will put upwards pressure on its steel pricing, despite the slowing growth in demand.”
He also said “Automobile production cuts and other supply chain disruptions arising from the Japanese earthquake and tsunami have put a damper on steel pricing. While the impact of the earthquake and tsunami on global steel supply and demand forces may be over-stated, it does appear to have had a global impact on bullish steel market sentiment.”
He said “While demand is rising in the US as its economy recovers, this increased demand is being met with ease by the considerable slack remaining in the US production capacity. US mills are coming off of incredible lows and therefore, despite the slack, the growth in demand based on earlier years is considerable. Soon the excessive capacity will be diminished and US steel mills will do everything in their power to increase prices to a level, where they can begin to recoup the past few dismal years.”
He said “Across the Atlantic, Northern Europe is showing steady demand increases, but Southern Europe continues to flounder. For the moment, sovereign debt crisis’ have been held in check and the continent appears set to move steadily towards a more broadly based recovery.”
He said “While short term steel pricing is very difficult to anticipate, our sense moving into the summer is that the positive drivers will begin to win out for a couple of reasons. First, summer is the construction season in most of the Northern Hemisphere and this typically puts upwards pressure on pricing. Second, absent some new major shocks to the global economy, the arrows point to rapid growth in the developing world and steady recovery in the developed world. This clearly suggests an upwards steel pricing trajectory.”
( Source: www.steelguru.com )