MEPS (International) Ltd provided the following summary of international flat steel and long products markets:

U.S. mill transaction prices for Flat Products continue to climb and further hikes cannot be ruled out since several producers are planning melting and rolling mill outages to repair, replace and upgrade equipment during the Summer. ISG still trails in the market on price but the company is expected to put on a $US20 per ton rise very soon. Imports are available at prices that in general are slightly below domestic ones.

The Canadian market is quite strong, particularly the construction sector. All the local mills are operating tonnage allocation and will be for the foreseeable future. They are late with deliveries and are not taking orders for August to allow them to catch up with the backlog. Imports from traditional sources are virtually non-existent but material is available from Egypt, Turkey, Taiwan and Russia at prices comparable to Canadian domestic figures and, in some cases, slightly higher.

In China, domestic prices for strip products are beginning to recover. Market sentiment has improved a little and buyers are showing more interest, although total volumes are still on the low side because financing remains a major issue. Import business is slow as the gap between domestic and International prices is still very wide. Demand from end-users is so good in Japan that the mills are struggling to meet orders. Local inventories are well adjusted. However, stocks of imported material at the ports, as end May, were up 4.1% from the previous month. Exports remain at a satisfactory level. In South Korea, sales of flat products are quite strong, despite the country's economic slowdown.

The Taiwanese domestic market has been quiet lately. A 'wait and see' attitude prevails because demand from China is weak. Customers are watching to see if the driving force from the Mainland will return to stimulate business in the Autumn. Despite this concern, CSC has pushed through its price proposals for home deliveries in the third quarter. The producer has also raised export values by between $US20 and $US100 per tonne, fob, for period three contracts.

Industrial activity in Europe remains weak and there are few signs of any real recovery in steel demand. Nevertheless, driven by a shortage of coke and tightness in slab supply, flat product prices remain firm. The high values in the EU have not yet resulted in any significant increases in offers of imported material. Potential suppliers can still get better prices in the USA, especially since the decline in freight rates has made ocean shipping more affordable. Also demand is good in the Middle East and Asia.

Polish producers are focusing sales on the home market where consumption has improved in-line with general economic growth. Import penetration is low and price trends remain positive. In the Czech/Slovak market, there are shortages in all product categories. With the exception of those on long-term contracts, virtually no imports are available. Domestic producers are trying to expand output by any means possible. Export order books are good.

In the Long Products arena, U.S. prices are stable following the slight weakness that developed in June. Demand is satisfactory. Similarly, Canadian transaction values have been rolled over from last month.

Chinese domestic prices for most construction steel are showing some recovery. The supply/demand balance has improved due to a decline in import business and the closure of some production capacity. Nevertheless, financing restrictions are still putting a damper on the amount of business being transacted. Japanese prices have been unaffected by the downturn in scrap values. Consumption is steady. Demand is weakening in South Korea. However, local suppliers continue to resist customers' calls for discounts. The stock build of imported material needs to be cleared. Although Taiwanese sales are satisfactory, we have detected some downward price pressure.

Lower scrap costs in recent months have worked through to EU steel selling prices. This has dampened sentiment. The situation could change over the next few months. Asian buyers are back in the market and scrap prices are rising once again. Summer is the peak building period in Poland and demand is strong as a consequence. Forecasts for construction steel consumption are healthy in the Czech and Slovak Republics.

Source: MEPS (International) Ltd, a leading supplier of steel market information.