Commodities | May 05 2006
By Chris Shaw (Tokyo)
Steel Industry Consultants MEPS has completed its review of global steel markets for April, confirming the market view that conditions generally have been supportive for producers.
In the flat products market in the US the consultant notes buyers generally have accepted higher prices, though this appears to be the result of tighter supply conditions rather than stronger demand. With increases in imports not yet having an impact on the tightness in the market MEPS sees further price hikes in June as possible.
Similar conditions are in evidence in Europe, as price increases for the second quarter have been achieved despite no real increase in apparent consumption. The Asian market is improving but conditions there are more mixed, MEPS noting while Taiwan is in uptrend Korea is gradually recovering from its previously overstocked position as inventory levels fall.
Purchasing activity in the Chinese market is showing some signs of slowing as MEPS notes stocks of foreign steel are declining and inventory adjustment continues, which it suggests is also proving to be good news for the Japanese market.
Conditions globally in the long products market appear a little stronger. MEPS notes an increase in building activity in the US has driven up transaction values. Similarly, it suggests with summer approaching in Europe the market looks set to remain firm, especially as higher scrap prices are pushing up steel prices.
MEPS also is forecasting some prices increases in the Chinese market as domestic stocks fall, though poor demand in the Japanese market should see its prices remain around current levels. MEPS sees some signs of improvement in Korea as it enters its peak building season, though while Taiwan is currently enjoying stronger prices the consultant remains cautious given the potential for the upcoming monsoon season to have a negative impact.