Global steel prices continue their upward surge

February 2, 2011
Transaction prices are moving relentlessly upwards worldwide as steelmakers address their escalating raw material costs.
The MEPS Global Composite Steel Price increased by 10.5 percent in January 2011, compared to December 2010.
In the US, the pace of flat product price increases is described as "fast and furious". The shortage of scrap and surging costs of other raw materials have pushed the mills into a frenzy of announcements regarding transaction numbers. As is usual, actual market prices are lagging behind the proposals. In the meantime, real demand is only just satisfactory.

Transaction values continue to head up in Canada at an alarming rate, with more increases to be applied through February and into March. Raw material costs are climbing rapidly and rising scrap prices are expected to generate further pressure. Steelmakers report that order books are strong as customers buy before transaction figures go higher and also to fulfil their needs to replenish and build inventories.
In China, steelmakers are facing sharply higher costs for iron ore and coking coal, which they must pass on to their clients, both at home and abroad. Purchasing by end-users has started to slow ahead of the upcoming Chinese New Year in early February. However, there is speculation that prices will continue to climb after the holidays, especially as many leading producers have elected to lift their official February ex-works figures.

Despite a slow recovery in consumption in many Japanese end-user sectors, market activity is improving. A very positive price revival is underway, as a result of an upsurge in steelmaking costs. In South Korea, demand from downstream industry remains lacklustre, making it quite difficult for the mills to implement increases. Posco is reluctant to try to cover rising raw material costs by means of domestic hikes in the first quarter.
Consumption in western Europe has changed very little during the last four weeks. Nevertheless, domestic producers are poised to lift second quarter offers because of raw material price developments and energy cost increases. Steel output has been curbed and restocking is expected to get underway shortly.

Source: MEPS

Chinese domestic steel prices will continue to rise in 2011

Jan 28, 2011

According to a statement issued by the China Iron and Steel Association (CISA) on Jan 25, steel prices in China will continue their upward trend in 2011, though some fluctuations will be seen and the increase will be at a slower rate than previous.

With China's Spring Festival beginning next week, there has been a certain slackening in transaction activity in the domestic steel market. The CISA indicated that, approaching the holiday, finished steel demand will drop and steel prices will be characterized by stability. After the Spring Festival, the CISA foresees that steel demand will recover and that finished steel prices will move in an upward direction.

As the Chinese government will adjust the country's domestic industrial structure and stabilize development in 2011, and also given the impact of uncertainty in the international market, the rate of Chinese economic development will slow down, domestic steel demand will drop, while raw material prices will follow a stable trend at high levels.

The CISA added that it was not optimistic on the prospects for Chinese finished steel exports, due to the Chinese government restrictions on products entailing high levels of energy consumption and pollution, and also because of international trade protectionism. (sourced:SteelOrbis)