Misery in the global steel market has entered an unending loop. After near wash out in Q2 with prices of billets and HRC loosing almost USD 60 per tonne despair seemed endless.
However towards the end of June some resistance was seen at USD 530 per tonne for both the products.
In a global economy beset with woes in EU and undulating US horizon remained perpetually hazy though emanating some streak of hope at time. Dormancy in the last 3 weeks sent euphoric fervor about a possible bottoming out of the market.
In between rock bottom transactions at USD 590 per tonne to USD 600 per tonne were reported for HRC and billets.
Dissection of the abyss reveals change in cost dynamics with emergence of US as a force in coal and scrap market. Hitherto the bastion of European and Australian suppliers US stepped into their shoes with an élan.
If it was the Turkish mills despite their reluctance opting for US scrap over European the prices touching USD 380 per tonne to USD 385 per tonne and USD 370 per tonne respectively the applecart was overturned overnight by the US coal miners with abundant availability of coking coal at USD 200 per tonne FOB. Discovery of shale gas in US proved to be the turning point in coal minefield.
Relentless EU crisis took a heavy toll on demand leading to surplus availability from CIS and China playing havoc in MENA and Asian countries.
Chinese domestic levels have remained steadfast in plummeting despite two consecutive rate cuts in June and July. Inventory burden exerting on the levels doom seems unending.
However market took a pause in end June early July as the mills in Russia and Ukraine had their order books full at least for July by mid-June giving them some breathing space to test the waters before announcing the August price.
Partial breakthrough in the EU 17 talks on bailing out Spain and Greece gave flicker of hope and the market over reacted.
Mills have tried desperately to push prices by USD 10 per tonne to USD 20 per tonne in billets and HRC during this period. However a weary market opted for circumspection before Ramadan and European summer holidays rather than take blind plunge. Domestic mills in UAE tried to hike prices by AED 30 per tonne for rebars in a bid to capitalize but transactions have eluded forcing them to announce major reduction.
Reportedly small size 5000 tonne to 7000 tonnes HRC parcel has been booked at USD 620 per tonne. However this cannot be the trend as ever since offers have plummeted further with booking of 20,000 tonnes reported at USD 580 per tonne CNF Abu Dhabi. Rebar from Turkey is currently being offered at USD 620 per tonne to USD 625 per tonne CNF with no bookings.
Even though the Japanese and Korean mills have lost out in price game it is reported that a major Japanese mill has offered plates for as low as USD 620 per tonne CNF Dubai, matching Chinese levels, sending ripples in the market.
Chinese domestic levels have lost over 1% during this week after the reduction in lending rates by 25 basis points indicates further price war with Chinese mills pursuing their agenda aggressively overseas.
Barely within a fortnight “Bottoming Out” rug has been pulled from underneath exposing the vulnerability of market.
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Source - Steel Prices Europe
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