Steel Prices Under Severe Pressure
July 05 2005 - Australasian Investment Review – (AIR)
The latest information from steel researcher MEPS indicates a torrid time for steel prices. In the flat products category, substantial price cuts were put in place for June in China and Japan for all strip mill products, and values are under severe negative pressure in South Korea and Taiwan, MEPS reports.
A plethora of commercial grade plate across the region is keeping prices weak. MEPS believes prices in South Korea and Taiwan (which have not decreased) will be pushed lower in the short term.
A common theme running through the flat products market in Asia is pertinent in other parts of the world, says MEPS. Mill order books are low because of over stocking by customers earlier in the year. Mill inventories are too high and, therefore, selling prices are being cut to generate orders.
MEPS believes the downturn in the market has just commenced, and believes the outlook for the next ten months is poor. Output has been running at levels well above real consumption for many months. Production curbs are anticipated in the near future but will take time to become effective.
MEPS envisages a continuous price slide up to March next year. Opportunities for exporting to the West are not good because prices are sliding in both the major consuming regions.
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