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Global sentiment weak, but slow pick-up still seems possible - 10 February 2012

Last week’s global market sentiment was weak, particularly in scrap, billet and most finished longs. Turkish scrap import prices fell $12/tonne to $437/t cfr according to The Steel Index (TSI).

Flat markets were more buoyant, but there were issues over the sustainability of recent price rises, given questionable world macro-economic trends. The IMF recently said China’s growth could fall significantly if the euro area “experiences a sharp recession.”

Iron ore prices picked up a little, reflecting some restocking in China after the Lunar New Year holidays. Coking coal was softer as miners lowered prices to attract reluctant buyers; any tighter supply due to the heavy rains in Australia could well be offset by less purchasing, claimed traders.

In this soft market, activity was limited. Strip mills continued to push for higher prices in Europe and China. Chinese domestic HRC prices fluctuated on slim transaction volumes as inventories continued to rise. But with stocks still quite low, even if increasing, traders said leading producers may try to raise domestic and export prices in the coming weeks. In Japan, the stronger yen was hurting exports.

In northern Europe, producers were successful in raising HRC to around €530/t ($695/t), according to TSI. Q1 requirements have mostly been fulfilled, with material booked for March delivery at a €30/t premium to that of early-February. However, prices are not likely to increase further in Q2, especially as the euro is strengthening against the dollar.

In North America the late 2011/early 2012 strip price increases lost some of their upward momentum. It was unclear to what extent HRC import offers from China and Europe were being shunned due to long lead times—arrivals would be in May/June. Nevertheless prices stayed static at around $720-750/s.t ($794-827/t).

Rebar prices across Germany and the Benelux weakened €5-10/t as bad weather halted construction works, but also due to the downturn in scrap. Taiwanese producers cut prices due to the weaker scrap market, whilst for Turkish rebar exports - apart from those to Saudi Arabia - the market was soft.

This market report was taken from the 8 February edition of SBB's World Steel Review.


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