Commodities | Apr 28 2006
By Greg Peel
International steel watcher MEPS reports the recent premium blow-out for steel products in the US and Canada has seen a rush of imports into the market. Imports in March/April have been 18% above January/February and 26% above Jan/Feb 2005. But the cheap foreign inflow has not had a great effect on sales prices, as one might expect.
The US is suffering a combination of strong demand for steel products and low inventories. Month’s supply on hand fell to a two-year low in March. North America currently has the highest prices for most steel products, in some cases hundreds of dollars more than in Asia and Europe, MEPS notes.
The price gap has begun to narrow as the imports catch up, providing some deceleration in import volumes. But in the meantime US mills have been able to increase their prices to the domestic market
The price premiums have unsurprisingly resulted in bleating from US mills about unfair trade, foreign subsidies etc etc (Hello pot? This is kettle) but the simple fact is they are making increased profits just as fast as imports have risen. Not much of a leg to stand on really.
MEPS predicts prices will start to ease into the second half, particularly as two blast furnaces that were off-line for adjustments will come back on.