Consumption of manufactured goods has improved in the US, although businesses are still reluctant to invest. Consumer confidence has been restored, driving up economic activity. Third country imports are down sharply as a result of recent low spot market figures. The present up-tick in domestic values may reverse this trend. Availability is also tight in Canada. Moreover, the US dollar has strengthened against the local currency, encouraging the domestic mills to lift prices quite aggressively during recent settlements. However, demand remains spotty, although in some sectors it is now slightly improved. Distributors continue to only purchase for jobs already on their books. End-users are cautiously optimistic.
Since the start of July, the long running downward market price trend in China has been reversed for many steel products, despite this being traditionally the slack season for consumption. Demand is steady and supply pressure has eased a little as inventories have been brought down. In response to market conditions, a number of leading steelmakers have raised their official ex-works figures for August, eager to cover their input costs. However, the largest mill, Baosteel, has cautiously left its numbers unchanged.
In Japan, sales to the manufacturing sector continue to climb but those to construction have not performed so well. Overseas business is flat, due to poor economic circumstances in Europe, a lack of demand from key customers in the Asian region and overcapacity in China. Meanwhile, imports are falling. Government stimulus policies are expected to boost consumption in the third and fourth quarters.
In South Korea, the domestic steelmakers have been unable to apply any price improvements for flat products. Overseas business is still slack, with Chinese demand relatively weak. Moreover, the depreciation of the Japanese yen has hurt Korean exporters. The steel industry is forecast to remain lacklustre during the second half of 2013.
Strip mill product selling values have stabilised in Taiwan, after coming under renewed pressure in June. The country’s largest producer, CSC, will leave its official domestic prices unaltered for September deliveries compared with the July/August period. The third quarter is usually a slow season for the local steel industry but the company said there is little room for further discounting. It is hoped that steady pricing will persuade customers to place orders rather than postponing purchasing decisions.
The West European market is slow ahead of the summer vacations. Order intake at the mills is very subdued, with few deals being concluded. Transaction figures have fallen as producers become more desperate to book business before the shutdowns. However, many market participants believe that prices are bottoming out and some suppliers are considering an increase in September.