Steel Strip

US mills’ utilisation rates have crept up steadily over the last month and now stand above 47.5 percent. The recent dire market conditions appear to have bottomed and expectations are for a steady, albeit slow, recovery. Service centres report that business activity continues to be low but inventories are now generally in balance with the reduced level of demand. Imports into the US are not a factor in the market and licence applications from overseas suppliers are still registering month-on-month declines. Most major steelmakers have now announced a series of transaction price advances for strip mill products, following a leading move by AK Steel at the beginning of June. The increases are effective with new orders scheduled for delivery in July.
Canadian transaction values, however, are still falling. The escalation in the strength of the local currency versus the US dollar is making the country more attractive to US mills, although offshore imports remain virtually absent. Domestic producers have reported a couple of weeks of modest improvement in their order position. This is, ostensibly, inventory replenishment which suggests destocking may be near completion. However, the consensus amongst distributors is that market conditions remain very sluggish and the continued automobile closures and shutdowns have damaged any possibility of a summer upturn. A slight pick up is envisaged in the September/October timeframe.
Despite steady growth in imports and domestic output, the price trend for Chinese flat products has turned positive, supported by a strengthening of real demand and traders restocking ahead of further perceived increases.
The recent sharp production cuts in Japan have helped to reduce inventories. Moreover, a small recovery has been noted in demand from car and electronic goods makers, as well as overseas customers. Stocks of strip mill products held by local steelmakers and distributors, as end of April, fell to below the 4 million tonne mark for the first time in two years. Meanwhile, quayside inventories of imported flat products dropped by 13.1 percent in the same time frame. The mills hope to be able to gradually lift output in the Autumn.
Weak consumption continues to dominate the South Korean scene. Following Posco’s extensive price cuts last month, other local suppliers have brought their figures inline with the market leader. Demand is slowly recovering in Taiwan. CSC will lift domestic list prices for July and August by an average of 7 percent compared to June – the first official rise this year. The company has said the increases are due to supply shortfalls as steelmakers have been axing production during the global economic downturn. Chung Hung Steel also announced higher selling values for June contracts with both local and export customers, citing escalating input costs caused by more expensive slab.
Polish strip mill product values are unchanged when denominated in Euros but are slightly higher than a month ago when quoted in the domestic currency because of exchange rate fluctuations. Demand has worsened as the economic crisis cuts deeper and prices are not expected to show any significant growth during 2009. Producers are carrying on with their output curbs.
In the Czech and Slovak markets, although the rate of price decreases has slowed, the outlook remains pessimistic as end-users have very little work on hand. In May, distributors’ stocks plummeted to a level where it seemed they needed to re-order but they have only purchased enough to fill any gaps that might have appeared. Producers have tried very hard to push prices up and, initially, a few buyers agreed to pay a little more. However, the higher figures did not hold. Customers have received offers from Russia, India and China but the quotations are similar to those of more local suppliers.
In Western Europe, end-user consumption remains weak. However, buyers are coming back to the market, albeit only for relatively small quantities to replenish their dwindling stocks. Although EU producers have lifted their latest domestic offers, customers are hesitant to accept the increases. With the US dollar weakening against the euro and sterling, imported material is becoming more competitive. However, many purchasing executives lack the confidence to order significant tonnages on such comparatively long delivery lead times, bearing in mind the woeful state of real consumption.

Article courtesy of MEPS

In the UK we hear that the European producers are increasing prices, but we are at that time of year when the summer closures are upon us and activity levels are low even in normal times.

There is still a great reluctance amongst service centres and end users to commit to any volume, customers are mainly looking to buy, just what they need for now. this is less due to any caution about prices, and more to do with financial necessity to keep minimum inventories.

The BBC is reporting further dramatic cuts in the UK Steel  Industry

Steelmaker Corus is cutting 2,000 more jobs at UK plants including Teesside, Scunthorpe and Rotherham.

The company has yet to announce the job losses, but Labour MP Elliott Morley confirmed the news. Unions said the cuts were "devastating".

About 500 white-collar jobs will go at Scunthorpe, Mr Morley said, while more than 400 jobs are thought to be at risk on Teesside and 800 in Rotherham.

Corus has seen demand for steel fall as the global recession hits the industry.

Mr Morley said he was "disappointed" at the level of cuts and added he had told the firm that job cuts should be a last resort.

 

Following on from dramatic cuts announced back in January of 2,500 jobs, the British steel industry is now a shadow of what it was.

Read the full story here

BSS Steel Strip now have online stock lists for to cover the availability of CS70 annealed, CS80 and CS95 hardened and tempered steel coil and spring steel sheet. View here.

Stainless Spring Steel stock list can be found here.

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ROTHERHAM’S giant Corus plant has suffered a further jobs blow after it was revealed plans to transfer work from the West Midlands were being scrapped.

In January bosses at Corus Engineering Steels - part of the Indian-based Tata group - announced more than 700 jobs were to go at the Aldwarke plant as part of a restructuring plan which would see more than 3,500 jobs axed worldwide.

They also announced around 100 jobs would be created when the company’s bright bar division was transferred from Wednesbury in the West Midlands to Rotherham.
But now the company says the plans have been ditched due to deteriorating market conditions.
Corus spokesman Rob Simpson said: "The company has decided not to relocate its bright bar operations from Wednesbury, West Midlands, to Rotherham.

Read the full article my Nick Ward, at the Sheffield Star

Vanmaker LDV is expected to be placed in administration by a court later, threatening up to 850 jobs and thousands more in the supply chain.

Attempts to sell Birmingham-based LDV as a going concern have failed.

Talks with one potential buyer, the Malaysian firm Weststar, broke down at the last minute last weekend, leading LDV to apply for administration.

Administrators could liquidate LDV’s assets and it is feared any buyer would take machinery abroad.

Such a move would end decades of production at the Washwood Heath site.

LDV managers and workers were angered last week when they were forced to cancel a planned lobby of Parliament because of Prime Minister Gordon Brown’s cabinet reshuffle.

Directors had hoped to persuade the government to agree to a £60m loan to secure the firm, but no ministers were available to meet them.

Full Story BBC NEWS

One of the biggest steel plants in the UK is to be ‘mothballed’, threatening the future of up to 2,000 workers. Workers at the Teesside Cast Products plant in Redcar were told the news ahead of a 90-day consultation period on the future of the plant. Owner Corus said the development had become unavoidable because of the termination of a contract by four international buyers of steel slab.
A spokesman said: “The company has begun discussions with employees and their representatives about what can be done to mitigate the impact of ‘mothballing’ the plant.”
Corus had agreed to sell a majority stake in the plant to a consortium led by Italian firm Marcegaglia, but the steel giant said that the consortium had unilaterally and unreasonably initiated moves to terminate the contract, making Redcar unviable. Corus, which has been owned by Indian conglomerate Tata since 2007, said it was using all legal means to ensure that the terms of the 10-year contract were enforced and that the four members of the consortium lived up to their contractual obligations.

ArcelorMittal, the world’s largest steel maker, said Wednesday that the Spanish government had granted it permission to lay off a major part of its work force in Spain, another sign of retrenchment in a country that already has the highest jobless rate in Europe.

The layoffs would run until the end of the year and could be extended until June 1, 2010, if economic conditions warrant. All laid-off workers will receive at least 90 percent of their gross salaries, with part of that amount paid by the government.

The company did not say how many employees it intended to idle, but it said it could cut the total hours worked, at maximum, by 40 percent at its Spanish plants.

Market sentiment has visibly changed in the flat products sector. We can detect an air of mild optimism, albeit tempered with extreme caution. The downward pressure on steel prices appears to be abating, helped by the recent severe production cuts, which have limited availability. Nevertheless, underlying demand remains weak. Customers are still not placing orders far in advance but diminishing inventory levels have caused mill sales to pick up slightly.
The German market is very quiet as buyers hesitate to finalise business and are only purchasing small quantities on as short as possible delivery schedules. Companies are not ordering anything that is surplus to their immediate requirements. Service centres are reportedly operating on average at 50 percent of their usual activity. Consequently, stock reduction is proceeding quite slowly.
The French market continues to be characterised by weak demand and ongoing destocking. However, producers have stabilised strip mill product prices and some are applying a small increase, although this is not linked to any improvements in consumption. The success of the initiative seems to be due to the effects of ongoing output curbs together with a strong desire on the part of the mills to recoup recent losses. Already, distributors are meeting with strong resistance from their customers when they try to lift resale values in line with their new purchasing prices.
In Italy, market players are less pessimistic than four weeks ago. At last, they can see signs of movement in activity, although they are quick to point out this situation may be only temporary. For the first time in many months, service centres are starting to issue enquiries. Their stocks have been depleted and replenishment is necessary. Local mills are attempting to lift prices marginally to try to recover the increased costs incurred due to production cutbacks. Even importers seem less desperate to offload tonnage and are trying to secure higher prices with quotations up by $US10/15 per tonne. It remains to be seen whether customers will accept this.
There is very little demand from UK end-users. Manufacturing industry continues to struggle but a few positive signs are developing. In the auto sector, Nissan in particular has picked up some business for smaller vehicles as a result of the various car scrapping schemes in place in a number of EU countries. In the construction industry, government backed projects for hospitals and prisons are generating more demand. Service centres, in the main, are only ordering for business already on their books or to fill gaps in inventories. In general, stock depletion is progressing well but resale prices from some distributors still do not reflect replacement costs. The sudden, positive movement in the Sterling exchange rate is making foreign deals look more attractive but buyers seem unwilling to run the risk at present, when material can be obtained relatively quickly from nearer home.
In Belgium, price movements are lagging behind those in the long products sector because there are still surplus quantities of steel at the mills and service centres. Market confidence has strengthened slightly even though it remains uncertain. Spanish stocks are at an undesirable level which gives distributors cause for concern since real consumption is extremely low. Resale values have not picked up. Nevertheless, players feel that the recent relentless deterioration in market conditions has been arrested for now. In fact, some buyers are confident enough to start to consider importing again. However, the current price differential is not quite large enough to be attractive.

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The MP for Redcar is to fly to Italy to hold talks about the future of under-threat steelworks Corus. Earlier this month a consortium of firms, led by Italian steel specialists Marcegaglia, pulled out of a 10-year deal, threatening nearly 2,000 jobs. But Vera Baird said she was hopeful of saving the plant, after being invited by Marcegaglia for a summit. She also said the talks in Mantua offered a "chink of light" for the Corus site, Teesside Cast Products. The agreement which has fallen through was signed in 2004 and committed the consortium of Marcegaglia SpA, Dongkuk Steel Mills Co Ltd, Duferco Participations Holding Ltd and Alvory SA, to buying just under 78% of the plant’s production for 10 years.

More here

In a separate development anger among Teesside’s steel families has turned to action yet again, with more than 5,000 now signed up to the Save Our Steel campaign on Facebook.

Following a national protest in Birmingham led by Teesside Corus workers, the region is also highlighting the plight of Britain’s battered manufacturing sector through the internet campaign.

ALL PRODUCTS CARBON STEEL PRICE FORECAST – APRIL 2009

WORLD (GLOBAL) - ALL PRODUCTS COMPOSITE CARBON STEEL PRICE FORECAST
The MEPS – Global World All Products Composite transaction price was, as anticipated, slightly lower in April. Global demand is weak for both long and flat products. Despite continued production curbs in all parts of the world, oversupply remains a problem. This is due to a substantial reduction in inventories in the supply chain over the past six months. However, it is now becoming clear that the rate of steel price decline is slowing. This is partly because the inventory drawdown is coming to an end. Further price reductions are anticipated over the next few months. The prospect of a significant cut in iron ore contract prices is leading to fears that prices will drop further.
An early revival in steel prices is unlikely. However, we do believe that a recovery is probable in the final quarter of the year and into 2010. The inventory depletion phase will be almost complete. Customers will need to start reordering on the mills. Delivery lead times are expected to extend. The mills will, almost certainly, maintain some production curbs. Moreover, the benefits of the various governments’ incentive packages should be filtering through to the steel sector as auto sales improve and infrastructure/construction projects start up.

EU – ALL PRODUCTS COMPOSITE CARBON STEEL PRICE FORECAST
The MEPS - EU All Products Composite transaction price decreased by approximately €30 per tonne in April. This was slightly below the figure anticipated last month. Competition from cheap dockside material forced local producers to reduce offer prices for flat products as they competed for the few orders available. Inventory depletion slowed with high stock levels for strip products remaining at many distributors. Decreases in scrap costs during March pushed down transaction values for all long categories. Consumption from end users was low. Mills continued to cut production in an attempt to re-balance supply and demand. With very few sales being concluded, however, this has yet to have any real effect on steel prices. Export opportunities declined further. Both the commercial and residential building sectors continued to weaken. Even projects that were ongoing have now been put on hold because of a lack of finance.
Selling figures should begin to stabilise in the second half of the year as domestic markets started showing small signs of recovery during the latter part of April. Recent rises in scrap costs could push long products prices higher after the summer break. However, there could still be downward pressure on transaction values as end user consumption will, almost certainly, remain weak in the short term. The conclusion of the new iron ore contract may also weaken transaction values for flat categories lower. Prices are then forecast to recover during the second half of 2009 as mills re-balance supply and demand by continuing to cut output and extending summer shut downs. The availability of credit should also improve later in the year. This is likely to lead to increased buying activity and accelerate the inventory depletion process. However, rises in selling figures may be limited by a resurgence in import volumes. Larger advances are forecast for early in 2010.

NORTH AMERICA – ALL PRODUCTS COMPOSITE CARBON STEEL PRICE FORECAST

The MEPS – North American All Products Composite transaction price moved down by over 5 percent in April. This was in line with our March forecast. End user demand remained poor. Scrap costs pushed long categories lower this month. Customers are still buying on an “as needed” basis. Consequently, the producers order volumes were low. Distributors are fighting for sales in a bid to offload surplus stock and raise cash. Reduced operating rates are also putting pressure on mill production costs. Inventory depletion continued throughout the supply chain. However, the pace of de-stocking slowed at US service centres, with gaps beginning to appear for certain grades/sizes. These are, however, not being replaced. Import purchases are too risky due to the extended delivery lead times. The housing market is still facing difficult times ahead, despite a 22 percent rise in new start-ups in February.
The All Products Composite price is forecast to continue decreasing over the next few months, even though the steelmakers are operating close to, or under, the cost of production. Falling raw material values are likely to put additional downward pressure on selling figures as demand from end users remains low. However, we do believe that we are nearing the bottom of the current price cycle. Import volumes are dropping and local mills are expected to maintain production cuts and extend summer shut downs. We predict that transaction values will stabilise around the middle of the year.
Government stimulus packages should begin to lift steel demand during the second half of 2009. Credit restrictions are also likely to ease. This should provide customers with the ability to increase their purchases. Low inventory levels in the market could then create supply shortages as order volumes grow. This will, almost certainly, lead to extended delivery lead times and rising prices from the fourth quarter onwards. Seasonal factors may temper these advances initially. Larger gains are then predicted for early 2010.

ASIA – ALL PRODUCTS COMPOSITE CARBON STEEL PRICE FORECAST

The MEPS – Asian All Products Composite transaction price moved up marginally in April. However, domestic price decreases were noted in all countries except Japan. Exchange rate movements, particularly in the South Korean Won, pushed the figures upwards when converted into US dollars. Output in the auto, appliance and construction industry negatively affected the cold rolled and coated sectors this month. Decreases in raw material costs put negative pressure on long products transaction values. End user demand was weak. Sales to distributors were low due to ongoing inventory depletion. Consequently, the mills tried to increase exports to help boost their order books. Nevertheless, poor global demand made this a difficult task, even for Chinese traders who have had export tax rebates reinstated. Local steelmakers continued to cut production in a bid to stem oversupply across the region. Building developments are being cancelled or postponed due to weakening economic conditions.
Transaction values for all products are forecast to decrease over the next few months as few signs of a pick-up in end user demand are evident. Distributors are expected to continue de-stocking with no rebound in sales anticipated until the excess inventories have been digested. Negative price pressure is also likely once the new iron ore contracts have been concluded, with Posco having already promised to adjust steel selling figures after the negotiations are completed. Weakening scrap costs are predicted to push prices for long categories lower in the short term. However, the oversupply situation may begin to ease shortly. Many local mills are scaling back production and several steelmakers are choosing to carry out maintenance in the hope that this will help to re-balance the market. Some sales recovery for long products in China is predicted in May/June, when several large projects start up. The Shanghai-Hangzhou railway in particular should generate demand in the longer term. Price stability is predicted for the third quarter.
A steady increase in steel consumption is predicted for the second half of 2009 as government schemes get underway. Prices are, therefore, forecast to advance in the final few months of the year. However, oversupply in some categories could temper these rises as new capacity comes on stream in China. Larger price improvements are forecast for early 2010 as a recovery in the world economy commences.

SOURCE: MEPS INTERNATIONAL LTD.

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