| World steel markets remain in a state of shock and | | | | said to be around $500-540 PMT CFR which is less |
| some panic as anything approaching normal demand is | | | | than half their levels at the height of the market in |
| yet to materialise. In the week we learned that over | | | | July 2008. Chinese producers continue to reduce |
| half of USA Blast Furnaces have been idled, capacity | | | | outputs and to temporarily lay off workers as a |
| reductions at the major EU producers were in excess | | | | response to the fall in demand. As yet, the |
| of 35% and that even some of the low cost leaders | | | | withdrawal of Chinese export duties has not yet |
| in the C. I. S were also facing production cutbacks of | | | | stimulated demand for Chinese steel products as |
| more than 20%. With the Christmas break upon us, | | | | expected by the Central Governnment. |
| many steel consumers are already making | | | | So is it all doom and gloom or are there any shards |
| contingency plans to take extended breaks as their | | | | of light in an otherwise depressing scenario ? During |
| order books are not capable of supporting normal | | | | the week a further albeit modest uplift in billet prices |
| working patterns. USA HRC steel prices continue to | | | | was seen in Asian markets with steel prices |
| remain under extreme pressure at the current level | | | | transacted at $ 415-420 CFR. CIS rebar was also |
| of $ 600 PMT FOB Mill despite the enormous capacity | | | | being quoted at $500-540 FOB for December |
| cutbacks. | | | | shipment representing a c $50 PMT increase albeit |
| The Tier 1 integrated mills are attempting to hold this | | | | there is no firm evidence of deals being done at this |
| price line but appear to be undermined by Tier 2 | | | | level. In Spain Celsa announced a Euro 30-50 PMT |
| producers who are using a scrap based EAF | | | | increase in rebar and merchant bar prices and whilst |
| production production route and are therefore able to | | | | initially met with some market scepticism, some |
| take immediate advantage of the precipitous fall in | | | | evidence is emerging of acceptance of some modest |
| scrap prices and pass these on through their supply | | | | increases in these products in Iberia. However, as |
| chain with a speed that conventional Blast Furnace | | | | welcome as these examples are a consensus is |
| route producers are unable to do given that they are | | | | emerging that these increases in the price of steel |
| typically tied in to some form of annual price contract | | | | may just reflect buyers having to cover short term |
| with iron ore suppliers. Despite some HRC bookings in | | | | shortages in their demand and that there is a risk in |
| Vietnam last week, the Asian markets continue to be | | | | steel producers misinterpreting these signals as |
| very quiet with a 'wait and see' approach being | | | | signalling a general market recovery. |
| adopted by major buyers. Prevailing HRC prices are | | | | |