Steelman Software for Steel and Metal Service Centers

HOT ROLLED COIL

US steelmakers report good order books but some buyers, sensing that transaction figures may be nearing the peak, have become more cautious recently. Today’s prices are 7.6 percent above the January numbers with delivery lead times into late March. There may be further advances in the short term. Currently, Canadian mill delivery lead times are out to April in most cases, although overall consumption is still weak. The producers continue to signal upward movement on transaction values, which have gained another $US40 per tonne since our last report. More increases are anticipated. However, the rises are clearly cost driven and not demand based.

The Chinese market became quiet at the start of this month as business activity wound down ahead of the Chinese New Year. Prices have undergone a 2.7 percent downward correction since our last report, undermined by ever growing inventories. Transaction values have bottomed out in Japan. Tokyo Steel’s decision to lift its list prices for February contracts had a positive effect on market demand. Pickled and oiled material is difficult to source.

Despite a flood of announcements from the US mills scheduling increases for the first quarter 2010, during recent negotiations, some suppliers have lifted strip mill product values, others have lowered them and a number have left them unchanged. It appears that producers are looking to fill their December order books and then aim for rises in January – probably achieving around $US20 per ton. However, there are no indications that demand will be any healthier at the start of next year. Market players are still waiting for the government’s “stimulus package” to really kick in. There are very few foreign offers.

The Canadian mills are using the month of December to clear their delivery backlogs so they can start 2010 with a clean sheet. Many have now closed their December order books and are looking to start to pencil in January business. The producers are attempting to signal that the price erosion that has taken place during the final quarter is over. Increases are being announced for January in the expectation of a good balance between available capacity and demand. However, the value of the Canadian dollar remains a concern to manufacturing competiveness, particularly in central Canada.

Local prices have continued to rally in China over the last few weeks although, more recently, this upward momentum had slowed, or even reversed slightly. Bullish government statements on the economy have helped to maintain market sentiment. Nonetheless, there is still a degree of caution regarding the possibility of overcapacity in the future. The manufacturing sector continues to grow, with export business being particularly healthy.

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