Oct 28, 2008
GLOBAL STEEL PRICES IN FREE FALL - FURTHER REDUCTIONS ANTICIPATED
Transaction prices continue to head downwards In the US as scrap costs are dropping rapidly. Mill order books are very weak because customers are depleting their inventories. Financing of stocks has become a real issue. Buyers are holding back from purchasing, expecting that the negative price trend will continue. Foreign suppliers are now more active with the strengthening of the US dollar but, so far, the quotations for arrival January are not attractive. Export opportunities are drying up as world markets adjust to the financial crisis.
Canadian mills have curtailed production at some of their facilities and further cuts may be scheduled for later in the quarter. They tried to hold prices at the September figures but eventually had to concede discounts. We expect values to drop rapidly during the final trimester. Customers have no interest in purchasing offshore material even though offers are becoming more competitive. The current credit crunch is putting undue strain on manufacturers and on consumer spending activity. This is likely to lead to further erosion of steel consumption over the next few months.
Chinese values have posted huge losses since our September report, amidst weak demand, excess stocks and negative market sentiment due to the slump in the world economy. The global crisis is badly affecting export business and thus diverting more material onto the domestic market. Falling raw material prices have enabled steel buyers to exert even greater pressure to gain discounts. Major steel companies have announced significant cuts in production to try to stabilise the situation.