14-12-2005

American Market

The rising trend in prices especially for flat products in North America has halted and prices are maintained at nearly the same level as in the last month. Rebar and wire rods prices are down with lower scrap prices. The demand for beams and plates are reasonably good and with lower imports due to various trade barriers, the prices of these items are firm in the domestic market. HR coils are quoted at $606/t, while wire rods are priced at $601/t fob. US GDP grew by an annualized 4.3 per cent in Q3 and fresh orders for major capital goods sector rose by a healthy 1.3 per cent. There was also an improvement in the index of consumer confidence.

European Market

A marked fall in construction activities resulting from seasonality factor is perceived in Europe that has led to a drop in rebars and wire rods prices. Cut in production has helped to stabilize the prices of beam and merchant bars. Lack of adequate demand is still plaguing the flat product prices. In addition the low priced imports are working against increased prices being absorbed in the domestic market. The price differential between HR and CR is quite high in Germany where HR is quoted at $467/t fob, CR is priced at $583. Unless there is a pick up in the market demand from the major consuming sectors, the planned price escalation in flats by the major mills in Q1 2006 may not be successful.

Asian Market

Demand in Asian markets is clearly visible. However the excess supply condition in the major markets are not permitting any price rise. China’s sustained production growth has already made the country a net exporter. During the first nine months of the current year, China has imported 20 million tonnes (mt) of finished steel, which is more than 16 per cent lower than the corresponding period of last year and only 1.08 mt of semi-finished steel. It had exported 15.8 mt of finished steel and 5.98 mt of semi-finished steel during the period. Long product prices in Asian markets are under pressure from low priced Chinese exports. Billets are offered at $350/t c&f, Wire Rods at $380. The prices of HR coils quoted at $380-$400/t c&f in Asian markets primarily from CIS sources are exerting a downward pressure on the domestic prices of flat products in major steel producing countries in the region.

The crude steel production in the world during the first 10 months has gone up by 6.2 per cent as compared to the corresponding period of last year. The production growth is primarily led by China who has added 60 mt during the period, while world production has gone up by only 53 mt. India’s production growth of more than 4 mt is worth mentioning.

World Crude Steel Production: January-October, 2005