MEPS said that “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 is not attractive. Export opportunities are drying up as world markets adjust to the financial crisis.”

 

It said that “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.”

 

MEPS said that “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 stabilize the situation.”

 

It added that "Orders on the Japanese mills are slipping, reflecting ongoing weakness in the building sector and a recent decline in output by the carmakers. Importers have slashed their price offers. Although our domestic figures are unchanged this month, we feel they cannot be held at present levels much longer. We anticipate decreases in November, especially as Tokyo Steel has just announced some major price cuts for next month’s contracts. The company fears that the current high numbers in Japan will attract more steel from offshore. Inventories of strip mill products held by local mills and distributors, at end August, moved up by 5.4 percent compared to July – climbing to the highest level for two years. Meanwhile, quayside stocks of imported flat products increased by 4.0 percent in the same time frame, the first rise in two months.”

 

MEPS also said that “South Korea’s economy is slowing. The currency has become a victim of the current global financial crisis – depreciating by around 20 percent in the last month. A rapid economic downturn has caused the Taiwanese steel market to weaken further and our domestic figures are below those reported in September.”

 

It further added that “Polish demand has reduced. Distributors are overstocked and do not want to place new orders. Producers are marking down prices to try to stimulate sales. Further discounting cannot be ruled out, although the mills are cutting production to try to prevent further sharp falls. The Czech/Slovak economies have also slowed but are still in relatively good shape. However, there is deep concern that exports of finished goods to neighboring countries, especially Germany, could be hit by the recent financial problems. Consequently, buyers are hesitating before placing steel orders.”

 

MEPS concluded that “The crisis in the financial sector worldwide is now impacting badly on the West European steel market. The tightening of credit lines and a complete breakdown of confidence has stalled business activity. For the small amount of deals being concluded, prices are weakening, despite efforts by the mills to hold them fast. Several domestic steelmakers have announced plans to curb output due to the substantial slowdown in demand for their products.”

 

 

Editor:    Ivy

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