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Heightening steel prices could be short lived - 26 August 2010

A significant boost in global steel prices is projected for September and October. Many in the industry feel the market will strengthen significantly in the coming weeks. They point to steady demand in India and China, pick up in German/EU economic growth, and the expectation of higher demand in the Middle East after the religious holidays.

Raw material costs have been a key driver behind the recent higher prices, but there are suggestions that the Q4 quarterly contract iron ore price could decline by 8-10% from Q3 levels.

Additionally, factors such as the higher steel prices in USA and China have contributed to this view on rising prices. In the USA, hot rolled coil is up by $20/s.t to around $580/s.t ($639/t) or more, whilst in China, producers too have raised list prices. CIS mills also are optimistic, with hot rolled coil rising in August by $20-30/t month-on-month to $540-570/t fob Russia Black Sea.

Steel Business Briefing’s Managing Editor, Roger Manser comments, however, that “the increase may be short lived. Though July’s daily crude production was down 6.5% m-o-m, it may well be that consumption was down by more.” He also adds, “the fear of a US double-dip recession and a stronger yen together with higher stocks in China, continuing austerity measures in Europe and fewer stimulus measures to boost construction elsewhere may dampen sentiment. Global overcapacity too is likely to negatively influence the industry for many months and even years to come.”



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