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Uncertainty keeps buyers in wait‐and‐see mode - 17 April 2012

Moves by producers to raise prices in a number of countries and regions seemed to be failing in the week ended 6 April: reduced buying activity has mostly meant insufficient support for any increases. Many markets were probably slightly oversupplied in part due to holidays and in part due to lower than hoped-for offtake. Buyers remained uncertain as to real end-use demand; they believed they could afford to wait a little to see actual Q2 trends.

Due to holidays in China, iron ore hardly moved in the week, though Turkish buyers took advantage of the lull in market activity to buy around a dozen scrap cargoes, and so pushed The Steel Index 80:20 price up by $5/t to a five-day average of $446/t cfr. In East Asia, many saw scrap prices at or close to a peak.

Steel prices were typically unchanged, suggesting a stalemate between producers still looking for the traditional Q2 bounce and buyers aware that market demand was generally inadequate. Strip prices hardly moved in both North America and Europe.

In China there were some signs of a pick-up in HRC prices at the very end of the week, as inventory levels fell on the back of slightly improved end-user buying and strengthening futures prices, also in expectation of higher demand. But there was also a feeling of caution given Beijing’s continued reluctance to relax the country’s purse strings in the face of stronger than expected inflation.

In billet and rebar, the producers in the Mediterranean area were arguing that the rise in scrap would push up steel prices. Turkish producers attempted a $10/t fob increase for May rebar claiming higher scrap and natural gas costs. Apart from Iraq, however, there appeared to be insufficient Middle East interest at these prices. While the Turkish mills were asserting a minimum of $670/t fob at the beginning of the week and $675/t fob at the end, the Italians were talking about a $10/t decline in export prices.

European longs prices softened slightly but some hope for better demand in the coming weeks. US mills were trying to hike some longs prices in the hope that demand there too would improve. However, they had not yet met with much success.

In East Asia, the producers were again straining to find positive signs and some mills in Japan and Taiwan were pushing price increases. Sentiment however remained generally sceptical.

This market report was taken from the 11 April issue of Platts SBB's World Steel Review.


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